Nortel Networks: Nortel Networks Unveils Solutions to Transform Broadband Networks

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February 17, 2004

Nortel Networks Unveils Solutions to Transform Broadband Networks

Expanded Portfolio Will Support ‘Triple Play’ Services to Help Traditional Service Providers Transform Business Models

RESEARCH TRIANGLE PARK, N.C. – Nortel Networks* [NYSE/TSX: NT] will expand its broadband networking portfolio to enable traditional wireline service providers to deliver a new set of value-rich, revenue-generating services to consumers and small-to-medium business customers over high-bandwidth, ultra-broadband infrastructure. Nortel Networks will enable ‘triple play’ services – voice, high definition television and high speed data – in addition to a larger set of emerging broadband services such as Voice over IP (VoIP), person-to-person videoconferencing and instant messaging that will empower wireline service providers to win new customers and drive higher average revenue per user.

“Today’s announcement is part of our ongoing strategy to help service providers transform their business models by creating highly innovative new services and associated revenue streams,” said Brian McFadden, president, Optical Networks, Nortel Networks. “As part of this strategy, we also intend to equip key elements of the network with the necessary intelligence so that broadband users can have unprecedented flexibility in personalizing their service set and ultimate quality of experience. This intelligence is the glue that will help service providers unleash the potential of their end-to-end network infrastructure to deliver new value to their customers and ultimately enhance long-term competitiveness.”

This new initiative will position Nortel Networks to offer service providers one of the industry’s most complete portfolios of broadband networking solutions – spanning optical, wireless, and wireline technologies. Telecommunications Services of Trinidad and Tobago Limited (TSTT) and Cable & Wireless Cayman Islands have separately announced that they will deploy DSL and VoIP solutions from Nortel Networks as part of complete network upgrades.

“There is significant capital spending that will occur in the broadband access market in the next four to five years – approximately US$5 billion annually,” said Matt Davis, director, Broadband Access Technologies, Yankee Group. “This longer term spending trend is being driven by a need for telcos to replace much of the existing broadband equipment with a newer generation of infrastructure that is capable of supporting a triple play business model.”

Nortel Networks will enable delivery of this expanded triple play service set through the creation of a comprehensive broadband networking solution. This solution will combine leading VoIP, multimedia services, optical networking, and wide area networking data solutions from Nortel Networks with products from newly formed strategic alliances with Calix, ECI Telecom and KEYMILE. In addition, Nortel Networks will look to further expand its industry relationships to include a variety of video processing engines and in-home networking devices in order to fully realize a complete end-to-end triple play offer.

Nortel Networks broadband networking solutions are designed to deliver the next generation of ultra-broadband services through a strong portfolio of products spanning both fiber and copper access. Nortel Networks new strategic allies each play a vital role to form a complete portfolio of products that cover the range of broadband access applications and markets. ECI Telecom brings an optimized DSLAM, Passive Optical Network (PON), and aggregation platform for the global market while Calix and KEYMILE provide versatile multiservice broadband loop carriers for markets using the North American (ANSI) and European (ETSI) standards respectively.

A brief description of each of the alliance solutions follows:

Calix will provide multiservice broadband loop carriers supporting a multitude of voice, data and video services over fiber and copper access infrastructure to both small-to-medium business and residential subscribers for North American (ANSI) markets. Deployable in either central offices or remote terminals and supporting a rich array of optical and copper network interfaces, the Calix C7 provides the functionality of traditional DSLAMs and NG-DLCs, as well as FTTP network elements.
ECI Telecom will provide its field-proven mass-deployed platform delivering multi-xDSL, Fiber-to-the-Premises (FTTP), and aggregation platforms for central office DSLAM, Optical Line Termination (OLT), and remote terminal applications. ECI’s optimized multi-service access gateways will provide the full scope of video, voice, and data services for a wide array of broadband access applications, while improving service provider economics by leveraging existing network assets and providing a smooth migration path to next generation networks. ECI is the supplier for DSL solutions for Telecommunications Services of Trinidad and Tobago Limited (TSTT) and Cable & Wireless Cayman Islands.
KEYMILE will provide its leading multiservice network access UMUX platform for markets using European standards (ETSI), providing an impressive range of existing and next generation broadband services. These encompass both NG-DLC and DSLAM capabilities over SDH/ATM and Gigabit Ethernet networks, and can be located in the central office, outside plant, and business premise. UMUX enables network operators to transform their existing telephony networks into converged IP solutions, all from a single box, covering copper and fiber, broadband and narrowband applications.

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 Wireless Networks, Wireline Networks, Enterprise 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 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; continued reductions in spending by our customers; fluctuations in operating results and general industry, economic and market conditions and growth rates; the communication by our auditors of the existence of material weaknesses in internal control; the ability to recruit and retain qualified employees; fluctuations in cash flow, the level of outstanding debt and our current debt ratings; the ability to meet the financial covenant in our credit facilities; the use of cash collateral to support our normal course business activities; the dependence on our subsidiaries for funding; the impact of our defined benefit plans and our deferred tax assets on our results of operations, cash flows and compliance with our financial covenant; the dependence on new product development and our ability to predict market demand for particular products; the ability to 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; barriers to 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; changes in regulation of the Internet; the impact of the credit risks of our customers and the impact of customer financing and commitments; stock market volatility generally and as a result of acceleration of the settlement date or early settlement of our purchase contracts; risks associated with a consolidation of our common shares; the impact of supply and outsourcing contracts that contain delivery and installation provisions, which, if not met, could result in the payment of substantial penalties or liquidated damages; the future success of our strategic alliances; and the adverse resolution of litigation, intellectual property disputes and similar matters. For additional information with respect to certain of these and other factors, see the most recent Form 10-Q and Form 10-K 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 and Business Without Boundaries are trademarks of Nortel Networks.

Contact for Press and Analysts:

Christie Blake
Nortel Networks
(978) 288-8439
christbl@nortelnetworks.com

Carrie Kasten
Nortel Networks
+44 1628 43 5358
ckasten@nortelnetworks.com

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