<PAGE>
 
                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 10549
                                   FORM 10-Q


     (x) Quarterly report pursuant to Section 13 or 15(d) of the
         Securities Exchange Act of 1934

     For the quarterly period ended March 31, 1998 or

     ( ) Transition report pursuant to Section 13 or 15(d) of the
         Securities Exchange Act of 1934


   Commission file number: 0-28432

           Boston Communications Group, Inc.
           ---------------------------------
           (Exact name of registrant as specified in its charter)

           Massachusetts                          04-3026859
    ------------------------------            ------------------
    (State or other jurisdiction of          (I.R.S. Employer
     incorporation or organization)           Identification No.)

     100 Sylvan Road, Woburn, Massachusetts 01801
     --------------------------------------------
            (Address of principal executive offices)

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

 _________________________________________________________________
(Former name, former address, former fiscal year, if changed since
  last report)

Indicate by check mark whether the 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 the number of shares outstanding of each of the issuer's
classes of common stock as of the latest practicable date.

As of April 28, 1998 the Company had outstanding 16,313,447 shares of common
stock, $.01 par value per share.

                                       1
<PAGE>
 
                                     INDEX

                                                            PAGE NUMBER

 PART I.   FINANCIAL INFORMATION:

 Item 1.   Financial Statements

           Consolidated Balance Sheets.............................3

           Consolidated Statements of Operations...................4

           Consolidated Statements of Cash Flows...................5

           Notes to Consolidated Financial Statements..............6

 Item 2.   Management's Discussion and Analysis of Financial
           Condition and Results of Operations.....................8

           Certain Factors That May Affect Future Results.........11


 PART II.  OTHER INFORMATION:


 Item 1.   Legal Proceedings.......................................14

 Item 6.   Exhibits and Reports on Form 8-K........................14
 

                                       2
<PAGE>
 
                       BOSTON COMMUNICATIONS GROUP, INC.
                               AND SUBSIDIARIES
                          CONSOLIDATED BALANCE SHEETS
              (IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

ASSETS                                     DECEMBER 31,  MARCH 31,
                                              1997         1998
                                              ----         ----
<TABLE>
<CAPTION>
Current assets:
<S>                                          <C>       <C>
Cash and cash equivalents                     $23,601   $19,302
 Short-term investments                        10,103    10,284
 Accounts receivable, net of allowance for
  billing adjustments and doubtful accounts
  of $ 1,304 in 1997 and $1,076 in 1998        12,445    16,387
 Inventory                                      1,550     1,253
 Deferred income taxes                          1,564     1,564
 Prepaid expenses and other assets                630       926
                                              -------   -------
       Total current assets                    49,893    49,716
 
Property and equipment, net                    38,087    38,362
 
Goodwill, net                                   4,067     3,915
Other assets                                    1,338     1,227
                                              -------   -------
       Total assets                           $93,385   $93,220
                                              =======   =======
LIABILITIES AND SHAREHOLDERS' EQUITY
 
Current liabilities:
 Accounts payable                             $ 2,786   $   774
 Accrued expenses                               7,304     9,976
 Income taxes payable                             466       206
 Current maturities of capital                  1,127     1,138
  lease obligations                          --------   -------
       Total current liabilities               11,683    12,094
 
Capital lease obligations, net of               1,598     1,309
 current maturities
Shareholders' equity:
Preferred Stock, par value $.01 per share, 
 2,000,000 shares authorized, 0 shares 
 issued and outstanding                             -         -
Common Stock, voting, par value $.01 per share,
 35,000,000 shares authorized, 16,273,947 and 
 16,312,347 shares issued in 1997 and 1998,       
respectively                                      163       163  
Additional paid-in capital                     91,029    91,081
Treasury stock (46,420 shares, acost)            (372)     (372)
Accumulated deficit                           (10,716)  (11,055)
                                             --------   -------
Total shareholders' equity                     80,104    79,817
                                             --------   -------
       Total liabilities and shareholders'   $ 93,385   $93,220
        equity                               ========   ========
</TABLE>

                                       3
<PAGE>
 
                       BOSTON COMMUNICATIONS GROUP, INC.
                               AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF OPERATIONS
                   (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
                                           THREE MONTHS ENDED
                                                MARCH 31,
                                             1997      1998
                                          ---------  ---------
<S>                                       <C>        <C>
Revenues:
  Roaming services                         $ 7,012    $ 7,796
  Teleservices                               3,789      4,589
  Prepaid wireless services                    790      2,934
  System sales                               4,028      5,064
                                           -------    -------
                                            15,619     20,383
 
Expenses:
 Cost of service revenues                    9,419     12,041
 Cost of system revenues                     2,640      2,673
 Engineering, research and development       1,029      1,403
 Sales and marketing                         1,063      1,333
 General and administrative                    649      1,414
 Depreciation and amortization                 890      2,452
                                           -------    -------
 
Total operating expenses                    15,690     21,316
                                           -------    -------
 
Operating loss                                 (71)      (933)
Interest income                               (262)      (386)
                                           -------    -------
 
Income(loss) before income taxes               191       (547)
Provision(benefit) for income taxes             98       (208)
                                           -------    -------
 
Net income(loss)                           $    93    $  (339)
                                           =======    =======
 
Net income(loss) per common share            $0.01     $(0.02)
                                           =======    =======
 
Shares used in computing net income
 (loss) per common share                    12,847     16,255
                                           =======    =======
</TABLE>

                                       4
<PAGE>
 
                       BOSTON COMMUNICATIONS GROUP, INC.
                               AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                (IN THOUSANDS)

<TABLE>   
<CAPTION>  
                                                       THREE MONTHS ENDED      
                                                            MARCH 31,           
                                                        1997        1998        
                                                        ----        ----   
OPERATING ACTIVITIES
<S>                                                   <C>       <C>
Net income(loss)                                      $    93    $  (339)
Adjustments to reconcile net income(loss) to net
  cash used in operating activities:
     Depreciation and amortization                        890      2,452
 
Changes in operating assets and liabilities:
     Accounts receivable                               (2,144)    (3,942)
     Inventory                                         (1,622)       297
     Prepaid expenses and other assets                   (250)      (211)
     Accounts payable and accrued expenses                559        660
     Income taxes payable                                  31       (260)
                                                      -------    -------
 
Net cash used in operations                            (2,443)    (1,343)
 
 
INVESTING ACTIVITIES
Purchase of property and equipment                     (3,908)    (2,549)
Sales of short-term investments                         5,766      5,976
Purchases of short-term investments                         -     (6,157)
                                                      -------    -------
 
Net cash provided by(used in) investing activities      1,858     (2,730)
 
 
FINANCING ACTIVITIES
Proceeds from exercise of stock options                    19         52
Payment of capital leases                                   -       (278)
                                                      -------    -------
 
Net cash provided by(used in) financing activities         19       (226)
                                                      -------    -------
 
Decrease in cash and cash equivalents                    (566)    (4,299)
Cash and cash equivalents at beginning of period          923     23,601
                                                      -------    -------
Cash and cash equivalents at end of period            $   357    $19,302
                                                      =======    =======
</TABLE>

                                       5
<PAGE>
 
                       BOSTON COMMUNICATIONS GROUP, INC.
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. The accompanying consolidated financial statements have been prepared by the
   Company, without audit, and reflect all adjustments which in the opinion of
   management, are necessary for a fair statement of the results of the interim
   periods presented.  All adjustments were of a normal recurring nature.
   Certain information and footnote disclosures normally included in the annual
   consolidated financial statements which are prepared in accordance with
   generally accepted accounting principles have been condensed or omitted in
   accordance with rules of the United States Securities and Exchange
   Commission.  Accordingly, the Company believes that although the disclosures
   are adequate to make the information presented not misleading, the
   consolidated financial statements should be read in conjunction with the
   footnotes contained in the Company's Form 10-K for the fiscal year ended
   December 31, 1997.

   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 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.

   In June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive Income"
   and SFAS No. 131, "Disclosures About Segments of an Enterprise and Related
   Information."  Both SFAS No. 130 and SFAS No. 131 are effective for the
   current year.  The Company believes that the adoption of these new accounting
   standards will not have a material impact on the Company's consolidated
   financial statements.

2. Earnings Per Share

   In accordance with Financial Accounting Standards Board (FASB) Statement No.
   128, Earnings per Share, the Company is required to calculate basic and
   diluted earnings per share.  Basic earnings per share excludes any dilutive
   effects of options, warrants and convertible securities and diluted earnings
   per share is very similar to the previously reported fully diluted earnings
   per share.  Basic and diluted earnings per share are the same for the Company
   for the quarters ended March 31, 1998 and 1997.

3. Inventory

   Inventories consisted of the following at:

<TABLE>
<CAPTION>
                                        December 31,  March 31,
                                            1997        1998
                                        ------------  ---------
                     <S>                <C>           <C>
                     Purchased parts         $ 1,114     $1,065
                     Work-in-process             112        188
                     Finished goods              309          -
                                              ------     ------
                                             $ 1,550     $1,253
                                              ======     ======
</TABLE>

                                       6
<PAGE>
 
                       BOSTON COMMUNICATIONS GROUP, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(CONTINUED)


4. Contingencies

   The Company received a letter from AT&T Wireless Services (AWS) stating that
   it believes that it is entitled to indemnification from the Company in
   respect to a certain claim presently pending in a case brought against AWS.
   The letter asserts that the claim gives rise to an obligation on the part of
   the Company to indemnify AWS.  No legal action has been brought against the
   Company and no amount of potential damages has been specified.  Management
   believes that the claim is without merit and that the outcome is unlikely to
   have a material impact on the financial condition of the Company.

5. Subsequent Events

   In May 1998, the Company entered into a strategic alliance with SmarTalk
   Teleservices, Inc. (SmarTalk) to process prepaid wireless minutes using an
   integrated service offering.  In conjunction with this alliance, the Company
   granted contingent options to SmarTalk to purchase 500,000 shares of the
   Company's common stock at $11.50 per share.  SmarTalk also granted to the
   Company the contingent option to purchase 500,000 shares of SmarTalk common
   stock at $24.44 per share.  Each option to purchase shares of common stock
   shall vest in 10% increments each time 25 million incremental minutes of
   prepaid wireless time are serviced.  Unvested options expire in May, 2005.

   In addition, SmarTalk will purchase equipment from the Company at a price
   approximately $500,000 below net book value of the equipment.  The Company
   will record a loss upon sale of the equipment of approximately $500,000
   during the quarter ended June 30, 1998.

                                       7
<PAGE>
 
                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 FINANCIAL CONDITION AND RESULTS OF OPERATIONS

RESULTS OF OPERATIONS - MARCH 31, 1997 AND 1998
-----------------------------------------------

Service and system revenues
---------------------------

Total revenues increased 30.8% from $15.6 million in the three months ended
March 31, 1997 to $20.4 million in the three months ended March 31, 1998.

Roaming service revenues increased 11.4% or $784,000 from the three months ended
March 31, 1997 to the same period ended March 31, 1998. The increase was
primarily due to a decrease in billing adjustments as a result of enhanced
billing and collection methods utilized by the Company and the Company's
clearinghouses, and the addition of new billing methods available to users of
the roaming services system.

Teleservices revenues increased 21.1% or $800,000 for the three months ended
March 31, 1998 compared to the same period in the prior year.  The increase
resulted primarily from the expansion of services provided to existing customers
and the increase in teleservices programs for new and existing carriers
utilizing the Company's prepaid wireless services.

Revenues generated from prepaid wireless services increased 271% or $2.1 million
for the three months ended March 31, 1998 as compared to the same period in the
prior year.  The increase was due to the increase in the number of markets where
C2C prepaid services were commercially available and a corresponding increase in
usage in those markets.  As of March 31, 1998, there were 55 C2C nodes deployed
in various markets throughout North America, compared to 25 as of March 31,
1997.  These nodes were processing calls for approximately 378,000 C2C
subscribers as of March 31, 1998.

System sales increased 27.5% or $1.1 million from the three month period ended
March 31, 1997 to the same period ended March 31, 1998.  The increase resulted
primarily from the sale of systems to a wireless carrier who is implementing
prepaid wireless systems throughout South America.

Cost of service revenues
------------------------

Cost of service revenues consist primarily of wireless network and landline
transmission costs in addition to the personnel costs associated with operator
assisted roaming service calls, teleservice calls and C2C operations. Cost of
service revenues decreased from 81.0% of service revenues for the three months
ended March 31, 1997 to 78.4% of service revenues for the three months ended
March 31, 1998.  The decrease in cost of service revenues as a percentage of
service revenues was primarily due to significant increases in revenue generated
by C2C to better absorb its operating costs and, to a lesser extent, increased
usage of the roaming services automated call completion system which resulted in
labor efficiencies.

Cost of system revenues
-----------------------

Cost of system revenues represents the cost of prepaid and voice systems sold by
the Company's Systems Division.  Cost of system revenues decreased from 65.0% of
system revenues for the three months ended March 31, 1997 to 52.9% of system
revenues for the three months ended March 31, 1998.  The cost of system revenues
for the quarter ended March 31, 1997 yielded a lower margin since a significant
portion of system revenues for the quarter ended March 31, 1997 resulted from
the expansion of an international prepaid system to an existing carrier
customer.

                                       8
<PAGE>
 
                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 FINANCIAL CONDITION AND RESULTS OF OPERATIONS

RESULTS OF OPERATIONS - MARCH 31, 1997 AND 1998 (CONTINUED)
-----------------------------------------------------------

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 and
systems.  Engineering, research and development expenses increased $374,000 or
36.3% from the three months ended March 31, 1997 to the three months ended March
31, 1998.  The increase was principally due to the costs, including recruiting
fees and other personnel costs, associated with the Company's hiring of new
personnel to support ongoing development and enhancements, implementation and
deployment of the C2C Network.

Sales and marketing expenses
----------------------------

Sales and marketing expenses include direct sales force and product management
salaries, commissions, travel expenses, in addition to the cost of trade shows,
advertising and other promotional expenses.  Sales and marketing expenses
increased $270,000 or 25.4% from the three months ended March 31, 1997 to the
three months ended March 31, 1998.  The increase in sales and marketing expenses
was primarily due to additional personnel, recruiting, commissions and other
personnel costs to support sales and marketing efforts in the prepaid wireless
service business.  The Company expects to increase expenditures for sales,
marketing and product management in the future.

General and administrative expenses
-----------------------------------

General and administrative expenses include salaries and benefits and other
expenses that provide administrative support to the Company.  General and
administrative expenses increased $765,000 or 118% from the three months ended
March 31, 1997 to the three months ended March 31, 1998.  The increase resulted
principally from the addition of staff to support the Company's growth and the
organization of 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.

Depreciation and amortization expenses
--------------------------------------

Depreciation and amortization expenses include depreciation of
telecommunications systems, furniture and equipment, leasehold improvements and
goodwill.  The Company provides for depreciation using the straight-line method
over the estimated useful lives of the assets, which range from three to seven
years.  Goodwill is being amortized over eight years.  Depreciation and
amortization expenses increased $1.6 million or 176% for the three month period
ended March 31, 1998 compared to the same period in the prior year.  The
increase was due primarily to the depreciation of additional technical equipment
and software to support the expansion and continuing development of the
Company's prepaid wireless network.  Depreciation and amortization expenses are
expected to continue to increase in 1998 due to increased capital expenditures
for telecommunications systems to support the continued expansion and
enhancement of the C2C Network.

                                       9
<PAGE>
 
                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 FINANCIAL CONDITION AND RESULTS OF OPERATIONS

RESULTS OF OPERATIONS - MARCH 31, 1997 AND 1998 (CONTINUED)
-----------------------------------------------------------

Interest income
---------------

Interest income increased $124,000 for the three months ended March 31, 1998 as
compared to the same period in the prior year.  Interest income was earned from
investments of the proceeds of the Company's public offerings.  The increase in
the quarter ended March 31, 1998 was due to higher cash and investment balances
than in the prior year.

Provision (benefit) for income taxes
------------------------------------

The Company's effective income tax benefit was 38% for the three months ended
March 31, 1998 compared to an annual effective tax benefit of 14% for the year
ended December 31, 1997. The increase in the effective income tax benefit was
due to the reduced impact of non-deductible goodwill amortization.

LIQUIDITY AND CAPITAL RESOURCES
-------------------------------

At March 31, 1998 the Company had cash, cash equivalents and short term
investments of $29.6 million as compared to $33.7 million at December 31, 1997.
Net cash used in operating activities for the three months ended March 31, 1998
was $1.3 million and resulted from an increase of accounts receivable, offset by
an increase in depreciation.  Accounts receivable increased $3.9 million
primarily due to systems sales in the latter part of the  first quarter of 1998.
This increase was offset by depreciation and amortization expense of $2.5
million resulting from greater capital investment made in the Company's C2C
network.

Net cash used in investing activities was $2.7 million for the three months
ended March 31, 1998 and consisted primarily of the purchase of
telecommunications systems equipment and software to support the expansion of
the Company's C2C network. The Company anticipates that over the next 12 months
significant capital investments will continue to be made to support service
enhancements and additional nodes to support the C2C network.

Net cash used in financing activities for the three months ended March 31, 1998
was $226,000 and consisted principally of capital lease payments.

The Company believes that existing cash balances and funds anticipated to be
generated from operations will be sufficient to finance the Company's operations
and the expansion of the C2C Network for at least the next 12 months.

The Company has begun to review its computer systems for Year 2000 compliance
and has designed a plan to test whether their systems will conform to Year 2000
requirements.  The Company is expensing all costs associated with these system
changes and does not anticipate that these costs will have a material impact on
its financial position or results of operations.  Although management does not
expect Year 2000 issues to have a material impact on its business or results of
operations, there can be no assurance that there will not be interruptions or
other limitations of system functionality.

                                       10
<PAGE>
 
                CERTAIN FACTORS THAT MAY AFFECT FUTURE RESULTS


This Quarterly Report contains forward-looking statements that involve risks and
uncertainties including statements regarding costs of deploying and supporting
the C2C network, increased expenditures for sales and marketing, greater costs
of depreciation and amortization.  The Company's actual results may differ
significantly from the results discussed in the forward-looking statements.  A
number of uncertainties 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 support its C2C Network, the
ability of the Company's carrier customers to successfully 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 has 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 billing options available on the roaming services
platform, the services being performed for the  teleservice 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 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 quarter of 1998,
primarily due to expenses associated with the development of its C2C Network.
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, personnel changes 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 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.  In addition, the prepaid wireless
and PCS 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.

                                       11
<PAGE>
 
                CERTAIN FACTORS THAT MAY AFFECT FUTURE RESULTS

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 that 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 addressing the particular needs of
providers of such new services.  In addition the development of better fraud
controls implemented by the carriers could decrease the demand for the Company's
roaming and other 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 enhancement
and deployment of its prepaid wireless services and systems, including continued
expansion of its C2C Network.  There can be no assurance that the Company will
successfully support and enhance the C2C Network effectively, that the market
for the Company's prepaid wireless services and systems 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. In addition, teleservices
revenues associated with billing inquiry support for C2C 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.

The Company has expanded its operations rapidly, creating significant demands on
the Company's administrative, operational, development and financial personnel
and other resources.  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, ensure the quality of the
Company's services and retain key personnel, its business, financial condition
and results of operations could be materially and adversely affected.

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.

                                       12
<PAGE>
 
                CERTAIN FACTORS THAT MAY AFFECT FUTURE RESULTS

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.

                                       13
<PAGE>
 
PART II.  OTHER INFORMATION:

Item 1.  Legal Proceedings

          On November 20, 1997, AT&T Wireless Services (AWS) sent a letter to
          the Company stating that it believes that it is 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 letter asserts that Count 13 of the complaint,
          which relates in part to prepaid wireless service, gives rise to an
          obligation on the part of the Company to indemnify AWS with respect to
          that count.  The amount in question is undetermined.  The suit against
          AT&T Corp. was filed on July 8, 1997.  The contract between the
          Company and AWS pursuant to which the Company presently provides
          prepaid services to AWS, and upon which AWS's claim for
          indemnification is based, was not executed until October 15, 1997.
          For this and other reasons, the Company believes that the claim is
          without merit.  No legal action has been brought against the Company;
          however the Company was served on April 2, 1998 with a subpoena
          seeking a deposition of a Company representative and production of
          documents.



Item 6.  Exhibits and Reports on Form 8-K


          a) Exhibits

             The exhibits listed in the Exhibit Index are part of or included in
             this report.

          b) Reports on Form 8-K

             NONE
 

                                       14
<PAGE>
 
                                  SIGNATURES


      Pursuant to the requirements 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.



      Boston Communications Group, Inc.
      -------------------------------------
      (Registrant)


      Date: May 8, 1998             By:   /s/ Fritz von Mering
                                          --------------------
                                          Fritz von Mering
                                          Vice President, Finance
                                          and Administration (Principal
                                          Financial and Accounting
                                          Officer and Duly Authorized Officer)

                                       15
<PAGE>
 
              BOSTON COMMUNICATIONS GROUP, INC. AND SUBSIDIARIES
                                   FORM 10-Q
                     FOR THE QUARTER ENDED MARCH 31, 1998



                               INDEX TO EXHIBITS
                               -----------------
<TABLE>
<CAPTION>
Exhibit No.      Description                                      
-----------      -----------                                      
<S>              <C>                                             
10.39            Agreement dated March 21, 1997 between the      
                 Company and Aspect Telecommunications           
                 Corporation.                                    
                                                                 
*10.40           Amendment No. 1, dated January 7,1998 to the    
                 service agreement between the Company and       
                 Frontier Communications of the West, Inc.       
                                                                 
10.41            Agreement dated February 9, 1998 between the    
                 Company and the University of Massachusetts     
                 at Lowell.                                      
                                                                 
10.42            Employment Letter Agreement dated February 10,  
                 1998 between the Company and E.Y. Snowden.      
                                                                 
27               Financial Data Schedule                         

</TABLE> 

* Confidential treatment requested as to certain portions.

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