UTStarcom said it has scored a coup of sorts by landing a deal to provide its mVision IPTV system to China Telecom, the largest fixed-line telecom operator in China.

Though it admits that revenue from the deal will be not be significant in the near term, the contract has importance beyond next quarter’s bottom line. China Telecom’s service, which will be launched by the end of this year, will start with up to 5000 subscribers in Shanghai.

“This is still early in the game, but we think it has great potential,” said Daniel Marcus, product marketing manager for UTStarcom, noting that China Telecom will give the vendor an opportunity to prove its platform can scale. “We’ve architected this for a million subscribers.”

The Shanghai launch concludes an integrated commercial trial of IPTV by the carrier in five provinces throughout China. Key to that trial was a partnership with Shanghai Media Group, which provides multimedia television content.

The carrier initially plans to offer subscribers a package of live broadcast television and video-on-demand. Later, the company will move into "time-shifted" programming and personal video recording.

“It’s a parity thing first, and then it’s followed by differentiating services,” Marcus said.