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September 23, 2002

Nortel Networks Extends Secure Routing Technology on Contivity to Enterprises

Provides Access Routing, Infrastructure Defense for Voice Over IP, Wireless LANs

SANTA CLARA, Calif. – Nortel Networks* [NYSE/TSX: NT] announced the second phase of Secure Routing Technology (SRT) on Contivity*, expanding its IP (Internet Protocol) security portfolio into key enterprise applications like wireless local area networks (WLANs) and voice over IP.

This builds on the IP security and advanced routing services announced with SRT in May 2002, while continuing to provide secure, high-performance network components.

“The flexibility to implement the services we require when we need them has enabled us to provide a meaningful network evolution path that bypasses the pitfalls of the solutions of other equipment manufacturers,” said S.W. Lee, senior manager, Network Planning Division, Korea Telecom, which has deployed Contivity Secure IP Services Gateway platforms in its network.

“Rather than having to hedge our plans to incorporate the best performing technology when it becomes available, the Contivity products from Nortel Networks allow us to implement the services we need or know we will need,” Lee said. “Bundling the disparate services and features has enabled us to improve our infrastructure in accordance with our plans dynamically as the business conditions require.”

The latest Contivity software – release 4.7 – enables Contivity IP Services Gateways to be deployed as access routers that can be equipped with other IP service functions. This will position customers to provide for the full spectrum of data traffic requirements that may be required in the future without having to pay for those IP capabilities until needed. Additional IP capabilities can be implemented when needed without network downtime or ‘forklift’ upgrades.

Because of the versatility of Contivity, enterprise customers will be able to extend secure IP services into critical applications that have previously proven difficult to defend.

“The flexibility of the SRT solution allows our customers to deploy a state-of-the-art infrastructure that is designed to evolve seamlessly and become more capable as their business grows,” said Oscar Rodriguez, president, Intelligent Internet, Nortel Networks. “This initiative is the first in the industry that provides the components to secure the entire information technology infrastructure, including data, voice and wireless applications.”

SRT on Contivity is designed to secure all types of IP services, including:

Converged services – Relying on Nortel Networks experience in providing voice over IP and wireless solutions, the infrastructure security offered by SRT on Contivity has been extended to support key IP telephony products like Nortel Networks Meridian* PBX and Business Communications Manager, both of which provide converged voice and data services as well as wireless.

Voice services – Voice over IP packets can be afforded the same security as traditional data traffic. But without critical services like bandwidth management and quality of service, latency issues have the potential to disrupt voice over IP implementations. Contivity IP Services Gateways provide the means to obviate latency problems while applying iron clad security measures.

Wireless services – Contivity IP Services Gateway is designed to protect wireless networks and wired local area network applications by establishing the remote connection behind the access point to create a secure, wireless tunnel to the end user. In addition, integrated firewall provisioning capabilities keep unauthorized users off of wireless networks.

Frame Relay services – Beyond IP, the new Contivity router also supports Frame Relay, critical for companies seeking to upgrade their existing network infrastructures. This will position carriers and enterprises with large Frame Relay networks to deploy the industry’s first Secure IP Services-enabled Frame Relay Access Device, driving reduced costs for service deployment and offering a flexible migration path for Frame Relay users.

VPN services –In the new Contivity IP Services Gateway, routers are embedded virtual private network (VPN) ‘tunnels’ that can be activated at any time.

In addition to VPNs, Contivity routers are able to provide integrated firewalls to protect the network from external threats. Bundled capabilities include: higher-level functionality for traffic management, such as support for the Open Shortest Path First protocol; Virtual Router Redundancy Protocol; and bandwidth management.

New Contivity IP Services Gateways tailored to the size and requirements of customers are currently available. All are IP services enabled, and come with bundled VPNs and stateful firewalls, as well as advanced routing capabilities. Additionally, Contivity Quick Start tool enables a customer to configure a single Contivity IP Services Gateway, which then automatically configures other IP Services Gateways in the data infrastructure.

Contivity 1000 provides cost-effective clear text and secure routing for small offices and home offices. Contivity 1000 is equipped with five VPN tunnels, and can be enabled to support up to 30 VPN tunnels. Contivity 1700, also equipped with five pre-integrated VPN tunnels, can be upgraded to support up to 500 VPN tunnels per device, and is targeted at the medium branch office market. Contivity 2700, built to serve the traffic requirements of large branch offices, natively supports up to 2,000 VPNs.

Nortel Networks was the leader in several categories for the VPN market in 2001, according to Gartner Dataquest.** Nortel Networks led in Dedicated IP-VPN equipment with a 22-percent market share; Total ICSA-Certified IP-VPN equipment with 34.2 percent; and Enabled IP-VPN equipment with 48.1 percent. Nortel Networks also led the IP VPN Carrier End-User market for 2001 with a 43.8 percent share, and tied for the top spot in the IP VPN Enterprise End-User market with 18.8 percent.

Nortel Networks is an industry leader and innovator focused on transforming how the world communicates and exchanges information. The company is supplying its service provider and enterprise customers with communications technology and infrastructure to enable value-added IP data, voice and multimedia services spanning Metro and Enterprise Networks, Wireless Networks and Optical Networks. As a global company, Nortel Networks does business in more than 150 countries. More information about Nortel Networks can be found on the Web at www.nortelnetworks.com.

Certain information included in this press release is forward-looking and is subject to important risks and uncertainties. The results or events predicted in these statements may differ materially from actual results or events. Factors which could cause results or events to differ from current expectations include, among other things: the severity and duration of the industry adjustment; the sufficiency of our restructuring activities, including the potential for higher actual costs to be incurred in connection with restructuring actions compared to the estimated costs of such actions; fluctuations in operating results and general industry, economic and market conditions and growth rates; the ability to recruit and retain qualified employees; fluctuations in cash flow, the level of outstanding debt and debt ratings; the ability to meet financial covenants contained in our credit agreements; the ability to make acquisitions and/or integrate the operations and technologies of acquired businesses in an effective manner; the impact of rapid technological and market change; the impact of price and product competition; international growth and global economic conditions, particularly in emerging markets and including interest rate and currency exchange rate fluctuations; the impact of rationalization in the telecommunications industry; the dependence on new product development; the uncertainties of the Internet; the impact of the credit risks of our customers and the impact of increased provision of customer financing and commitments; stock market volatility; the entrance into an increased number of supply, turnkey, and outsourcing contracts which contain delivery, installation, and performance provisions, which, if not met, could result in the payment of substantial penalties or liquidated damages; the ability to obtain timely, adequate and reasonably priced component parts from suppliers and internal manufacturing capacity; the future success of our strategic alliances; and the adverse resolution of litigation. For additional information with respect to certain of these and other factors, see the reports filed by Nortel Networks with the United States Securities and Exchange Commission. Unless otherwise required by applicable securities laws, Nortel Networks disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

*Nortel Networks, the Nortel Networks logo, the Globemark, Contivity and Shasta are trademarks of Nortel Networks.
** Gartner Dataquest “IP VPN Equipment: Worldwide, 2001 Update,” Caroline Jones, August 14, 2002.

Contact for Press and Analysts:

Trade media:
Pat Cooper
Nortel Networks
408-495-9608
pat.cooper@nortelnetworks.com

Giorgia Casnedi
Nortel Networks
+44 (0) 1628 43 3117
casnedi@nortelnetworks.com

Business media:
David Chamberlin
Nortel Networks
972-685-4648
ddchamb@nortelnetworks.com

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