LRTV: I’m here with Bill Huang, Senior Vice President and Chief Technology Officer at UTStarcom. Bill, what is UTStarcom announcing at the show?

Bill Huang: UTStarcom is coming to Supercomm with announcements of new products in the IPTV area, in GPON, and in areas of FTTH, Sonet, and RPR. In addition to that, we’re also announcing a UBS fiber node from the acquisition of Pedestal Networks.

LRTV: What are some of the key opportunities for UTStarcom in North America?

Huang: UTStarcom sees North America as a media market for broadband. We also are developing markets in wireless and broadband wireless areas in North America. We believe that with both independents and RBOCS going fiber-to-the-node and ADSL, as well as fibre-to-the-home, there are a number of technologies in which we have very competitive products.

LRTV: Excellent. And what kind of competitive threats is UTStarcom facing in China from the European and U.S. vendors?

Huang: UTStarcom since its founding has been doing business in China – although we haven’t viewed it as a U.S. company in China, though we have long entrenched and become very much localized. So we seek competition mostly from local Chinese vendors, and since our entrenchments in China we see a lot less competition – or the other vendors from outside of China are a lot less competitive against UTStarcom.

LRTV: UTStarcom has had some financial difficulties in the past few months. What’s the company’s plan for resolving some of these difficulties?

Huang: UTStarcom has gone to IPO in March 2000. Since our IPO, we have started a program to diversify our revenue from China to markets outside of China. And this program has been going on quite well, and what has happened is the rapid growth and decline of the PHS market is a little faster than what we have anticipated. So the expansion of our businesses in broadband in markets outside of China is a little slower compared to our China market revenue.

So we have taken some financial hit in the last two quarters. What the company is trying to do here and now is to plan for the financial forecast for this year and try to conserve our cash and try to make the company into a profitable mold. So we remain confident that our efforts in this area are going to pay off in the next three quarters.

LRTV: Let’s move on to some general industry questions. Cable companies and telecom carriers are competing really heavily right now. Who do you think is going to win and why?

Huang: This is a very good question. We believe, depending on the regions of the world, cable companies and telecom companies have different strengths. In North America, for instance, cable companies seem to be stronger and the telcos are starting to catch up, but they do have disadvantages in terms of content rights and distribution licences. In Asia, however, the telcos are quite strong and the cable companies are relatively weak. The lack of two-way infrastructure for a lot of Asian cable operators is going to restrict their ability to compete in IPTV and the emergence of interactive televisions. So in that case the telcos are going to becoming much stronger, and they potentially are becoming the winner in this emerging IPTV area.

LRTV: And what impact is fixed/mobile convergence going to have on the service provider market?

Huang: One of the key things in the fixed-to-mobile convergence area is the ability for the consumers to have a choice to continue to use their cell phone but with the option of accessing different infrastructures. In this case it could potentially be a WiFi or Bluetooth or any type other types of wireless infrastructure or wireless access different from their incumbent mobile suppliers. So that option will enable the consumers to aggressively seek fixed-to-mobile convergence solutions. And that is going to drive the collaboration and to some extent the convergence of the services between the mobile operators and the fixed -line operators.

LRTV: Obviously, you guys are in the IPTV business and you're making lots of IPTV gear. But what impact is IPTV really going to have on the service provider market?

Huang: We like to believe that IPTV is going to be the killer application for broadband. Compared to PCs, the number of televisions in the developing world is probably 10 times more than the number of PCs at every home. And even in North America the number of PCs is probably three times less or the number of televisions is three times more. And television and continues to be one of the most favored items in the family and the most watched item as well.

So using television as either a tool for entertainment or as a portal for information services has always been a dream for the broadband or the telco service providers. And we believe IPTV will serve as the foundation service or serve as the catalyst to drive that direction, and IPTV will also at the same time allow the service providers to migrate away from the traditional voice services that they have enjoyed, but it’s quickly declining.

LRTV: We'd also like a comment on 3G. What kind of an impact is that going to have on on how carriers are offering services right now?

Huang: People have been talking about 3G for the last five years. The reality is 3G hasn’t really arrived. But we remain confident that 3G will become one of the most important technologies for the mobile industry due to two very important reasons. One is due to the decline in the permanent charge and the continuous increase and the quality of use by the mobile users. And the second reason is due to the vast increase in the interest in using data content on the mobile network.

And this technology trend will drive the people to 3G technology, and also the emergence of much lower cost. Three-G baseband chips that will deliver much lower-cost terminals will provide the foundation for the emergence of 3G. And I believe the impact for 3G is over the next 10 years it will completely replace the 2G network.

LRTV: Final question. How do you think the Beijing Olympics are going to push 3G networks and technology adoption?

Huang: The question about technology impact due to the 2008 Beijing Olympics is very important. I believe China would like to present to the world a world-class 21st Century – either telecommunication or transportation or even in general economic infrastructures at the 2008 Olympics. And while the driver behind that is to position China as the premium country in the coming Information Age, we believe that will create two very important impacts.

Number one, it will accelerate the deployment of fiber to home, especially in the Beijing area. And we are already seeing very aggressive initiatives from the government in that direction. Secondly, we’ll drive the deployment of 3G, so that sort of creates the deadline for China for the deployment of 3G services. Which I think is encouraging, because, you know, we’ll kind of break away the government red tapes.

And finally, I think the combination of 3G and fiber to the home, together with the IPTV deployment, will to some extent loosen a lot of regulatory red tapes in China and it will probably provide a catalyst for China’s technology development over the next 10 years after the Olympics.