January 2004

In the CEO Spotlight section in Internet Telephony� magazine, we recognize the outstanding work performed by exemplary companies. Each month we bring you the opinions of the heads of companies leading the Internet telephony industry now and helping to shape the future of the industry. This month, we interviewed Fred Lax, President and CEO of Tekelec.

IT: What is Tekelec�s mission?
FL: Tekelec�s mission is to serve our customers around the globe by delivering the best network communication solutions, products, and services. The experienced, talented, and committed people of Tekelec and our partners propel this mission.

IT: What is your vision for Tekelec and how is the company positioned in the next-generation telecom market?
FL: The transition to the next-generation telecom market is being driven by changes in regulation and technology and the need to reduce capital and operational expenditures while increasing revenue generation. Service providers are seeking a simplified solution that brings together leading-edge �enabling� technologies and helps reduce capital costs and operating expenses while providing the flexibility to adapt to future applications and services.

Tekelec and Santera Systems, Inc., recently joined forces to take advantage of evolving market opportunities. With our Class 4 and Class 5 switching portfolio (including SG, MGC, and MG), Tekelec�s next-generation switching and signaling portfolio combined with value-added applications uniquely position the company as a leading solutions provider worldwide.

IT: Describe some of the key decisions that you have made as CEO to steer your company through the recent challenging financial straits.
FL: With a keen focus on operational excellence to meet customer needs, we are building on our core competencies by investing wisely to position the company for global growth. During an economic and industry downturn, Tekelec has remained strong, continuing to strategically invest, grow, and expand into new technologies and markets.

Tekelec�s expansion into switching builds on its signaling expertise. As the industry transitions from circuit to packet networks, suppliers need expertise in both signaling and switching � which we can definitely provide.
We have focused specifically on the following three strategic areas:

� To build on Tekelec�s legacy in signaling technology and high value-added applications for wireline and wireless carriers.
� To provide next-generation switching solutions.
� To expand globally.

Working with 36 customers in 27 countries outside of North America, we plan to increase non-U.S.-based revenues from around 20 percent to 40 percent.
Tekelec continues to benefit from the major proliferation in mobile communications. Mobile operators rely on our solutions to expand their networks reliably and cost-effectively by leveraging IP or ATM networks to carry signaling traffic. They benefit from reduced transport costs, flexible bandwidth, greater message throughput, and lower infrastructure costs -- and a solid migration path to 3G.

IT: What makes Tekelec�s product offerings unique and how do companies benefit from using them?
FL: We understand the need to integrate existing legacy networks and next-generation applications with open standards. Tekelec�s NOW and NEXT-generation solution focuses on what service providers want in their networks: A single managed platform that supports future business models. Advantages include simplicity, reliability, flexibility, increased revenue-generating ability, and lowered capital and operating costs.

For switching applications, we support TDM and packet fabrics. Our approach offers a cost-effective alternative to TDM alone or TDM/data-centric applications. Our carrier-grade switch enables a smooth migration from traditional circuit-based to next-gen packet-based networks. It allows services to be switched in their native form as well as in any-to-any mode, and it delivers density and growth unmatched in the market today. We truly integrate voice and data services at the first point of switching, enabling the rapid introduction of profitable new services at dramatically reduced operational and capital costs.

IT: What is the most pressing issue facing our industry today, and what can be done can to alleviate this problem?
FL: Economics and the investment profile necessary to move the world�s telecom infrastructure forward are pressing issues. Investments in the industry today often don�t result in immediate returns.

At the next level, the adoption rate of next-generation technology tops the list. The next-gen network converges voice and data networks to provide consumers with personalized multimedia services -- anytime, anywhere. We are addressing the issue with an ardent focus on the value proposition of this technology and the requirement for an integration and migration strategy. Packet switching, which is the foundation for this network, is not new to Tekelec. We have significantly expanded our product portfolio with the Santera addition. With its combined signaling and switching expertise, Tekelec is positioned at the forefront -- as a capable provider of high-octane, complete, and robust solutions.

IT: Describe your view of the future of the IP telephony industry?
FL: Tekelec�s paradigm, the �Next-Generation Core,� helps providers build smart networks with an innovative combination of switching and signaling solutions and applications, which, in-turn, improve economics. With the single-vendor approach, providers can simplify service creation and delivery while leveraging technology advancements. The approach offers an open architecture for increased flexibility and ease of interoperability while providing the scalability and reliability (five-nines or better) required to deliver superior service. It supports voice and data services for increased revenue generation and provides a clear migration path for network evolution.

While there are still many issues to overcome, such as economics and regulatory, next-gen is not a matter of �if� but �when.�

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