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Tellabs President and CEO Krish A. Prabhu is a 25-year veteran in the telecom space and has seen the industry from many different points of view. He began as a member of technical staff at AT&T Bell Laboratories and subsequently worked in both R&D and management at Rockwell International before a 10-year stint at Alcatel that included two years as CEO of Alcatel USA and two years as COO of Alcatel Telecom. He then became a venture partner at Morgenthaler Ventures before rejoining the network equipment world as Tellabs' new leader in 2004. Prabhu leads that company's effort to expand into data equipment and the newly hot FTTP market. He spoke with Telephony Editor-at-Large Carol Wilson.

How would you describe the current state of the industry?

I believe it is in a quiet expansion. But there is a lot of underlying need. If you are going to sit at home and watch TV, where you can get a cable channel or satellite, you don't need IPTV. But if you are going to watch on that handset, you absolutely need IPTV.

That's an interesting comment coming from someone whose company sells a lot of fiber to the home. Do you think wireless or wireline will lead in this area?

One thing leads to the other. I think everybody would want a fiber to the Internet. You can be in a fixed location and have a fiber come all the way to your home or your closet, but more importantly, when you are on the move there will be a subset of what you get from fiber to premises that you will get on that handset. The handset has a broadband connection to the Internet, and you use personalized services, whether you are in your home or at work or on the move.

To the handset, you don't need IPTV, you need IP video — it's a very different service that is not the full range of TV signals. It might be video clips, video streams or accessing data files in a format that is video compatible.

Many people are concerned that the U.S. is falling behind the world in broadband penetration. Do you share those concerns?

I'm not arguing that concerns are not valid. If you look at reality, though, wireless took off in Scandinavia in a big way much earlier than it did in the U.S. The U.S. was one generation behind. [But] the U.S. has caught up, and the U.S. and China will far outstrip the total number of wireless customers in Europe.

In our country, the telecom bubble burst, then general economic conditions weren't favorable, and our government has been more worried about bigger issues — there have been greater concerns over terrorism more so than telecom infrastructure.

It's the way America works, the way things happen here. Consumer demand has always been interested in keeping the U.S. on the cutting edge — look at the iPod and how quickly it caught on — that will pull America up.

In the wake of BT's announcement that it has selected Huawei as an equipment vendor, are you worried about Asian vendors coming into the North American market?

My personal opinion is the concerns are unwarranted. One needs to meet the price point that our customers are looking for. If they are winning business, it means mean the Chinese vendors have come in at very low pricing. Can they sustain this pricing, and if they can, why is it they can do it and we cannot do it? There is nothing today that prevents us from taking on Chinese vendors on pricing basis.

We do most of our manufacturing in China, and most of our parts are procured in China. Sure, our R&D costs are higher, because we do that over here. But we can choose to move more of our R&D to China or use Chinese suppliers.

What impact will the big mergers have on Tellabs and other equipment vendors?

They will have considerable impact. First, they don't do more network builds, because they are using each others' network builds. If AT&T was going to build out access or SBC was going to build out long distance, now that's not going to happen.

Second, consolidation does present an opportunity — can you step up and show them how to consolidate and get maximum efficiency out of their operations?

Third, when the merger occurs, most companies would try to extract more synergies to justify the cost of the merger. That means more focus on integration, consolidation and cost reduction; that tends to freeze spending.

The fourth risk: Does it take strategic focus from what they announced? If there is major fiber to the node initiative like SBC has, after the AT&T merger, are they going to focus more on consolidation of business customers and maybe watch until FTTN is more stable? Who knows.

AFC had traditionally served the independent market. Now that it is integrated into Tellabs, how will you address this market?

We do believe that the independent market is an important market. It's about 25% of the total U.S. access market, so it is not small by any means. And there are certain needs that show up much earlier in the independent market, such as video over fiber that carries local content. That is important in places like Nebraska and Iowa, where there isn't satellite or cable service. They can make a strong case that they want Triple Play earlier than the [Bell company]. My sense is, we are very bullish on it. AFC had not done as much investing in the independent market, because they could not; they had focused their efforts on [the Bell companies] and fiber. But we have greater resources, and we can refocus our investments a lot more.

What do you enjoy most about Supercomm?

I really enjoy the booths and trying to see first hand what they are focusing on. Every Supercomm has a theme, and I like to try to extract that as I walk around the trade show floor. It's a great event to network. I like greeting customers and showing them what we have. All in all it's a good event.