First of all, I'd like to introduce UTStarcom briefly. UTStarcom was formed in 1995 and now has 7,000 employees and three R&D centers in USA, China and India. According to the market trend, UTStarcom is running other businesses than the PHS as well. UTStarcom is pushing forward with wireless system, such as CDMA, 3G, WLAN etc., broadband system, such as IP-DSLAM, packet switch system, such as softswitch, multi-media system, such as IPTV, multi-function system etc.

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     As for the PHS's development in the world market, service launch in Honduras from this July, in Mali from June and planning in Swaziland are this year's topics. In Vietnam, the PHS subscribers reached 100,000 and the PHS/GSM Dual-Mode handset is already on the market. In Taiwan, the number of subscribers is 700,000 and the PHS/GSM Dual-Mode handset is selling well.
     Next I'd like to explain about the Chinese market situation. There are four major telecom operators China Telecom, China Netcom, China Mobile and China Unicom and the former two are providing the PHS service.
     Let's look back upon the PHS's growth in China.
     UTStarcom launched the PHS service in 1998 first in China. After that, the subscribers reached 1 million in 2000. In that year, the GSM subscribers were 10 million so that the PHS can be said as the quite competitive technology considering its subsequent growth.
     In 2003, the PHS subscriber increase exceeded that of the fixed line. At present, the subscribers reached approximately 60 million and anticipated to be 65 - 70 million within this year. Now the PHS is the second largest mobile service after the GSM in China and seven cities have over 1 million subscribers.
      In the first half of 2004, the PHS's new subscriber increase was 1.83 million compared with the fixed line's 1.44 million. The PHS business contributed to 56% of the fixed line operators's business. As for the SMS, message volume increased from 60 million messages/month in December, 2003 to 340 million messages/month in July, 2004. An interconnection with both GSM and CDMA has also been realized in 2004. As for C-Mode, there are 180,000 active subscribers and peaked 20 million minutes of use per month, 2004.
      Over 35 handset vendors and over 200 handset models are now on the market. PHS value chain is being formed as over 100 service and content providers have already entered into the PHS market.
      Let's examine the reason why the PHS was so successful in China. Above all, there's a desire for mobility, however, citywide mobility satisfies 90% of population. Further, there's a desire for affordable mobile services. And not wireless network (GSM, CDMA etc.) operators but competitive fixed line operators are providing the PHS service.
      As for the 3G situation, the Chinese Ministry of Information Industry (MII) completed the field trial in August, 2004 and the results were satisfactory, however, a lack of handset models and compatibility would need more improvement. Further, the 3G license grant time has not been fixed yet and an interference with the PHS should also be solved.

SWOT (Strength Weakness Opportunity Threat) for PHS is as shown in the slide.

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      For future development of the PHS, the following three points would be essential.
      Firstly, to maintain the cost leadership is the key factor for surviving the competition.
      Secondly, to enhance the system capability for high traffic application and high quality coverage is the key factor for attracting more subscribers.
      Thirdly, to enhance the handset to match up with the industry standard (PIM : Personal Identity Module) is cost effective for operators to manage their handset business and flexible for end users to choose and use handsets and accordingly it's the key factor for market expansion.
      In conclusion, the PHS still has opportunity to grow, but the opportunity opens for other technologies too. UTStarcom will continue to invest in the PHS technology by playing an active roll in the PHS MoU Group, working with the industries to enhance the technology, bringing our solution and experience to the global market etc. We wish a successful PHS MoU Group General Meeting in addressing some of the critical success factors.