Alcatel and Netergy Networks Announce Strategic Partnership for Voice Over DSL Chipsets.

Business Editors/High-Tech Writers

Partners to Integrate Netergy Audacity T2 Chip with

Alcatel ADSL DynaMiTe Chipset

SANTA CLARA, Calif.--(BUSINESS WIRE)--June 19, 2000

Alcatel (NYSE:ALA)(Paris:CGEP:PA) and Netergy Networks, Inc. (Nasdaq:NTRG) announced today that they have entered into a joint development and license agreement to develop highly integrated voice over digital subscriber line (VoDSL) chipsets and reference designs. These products will be based on Netergy Networks' integrated circuit and embedded software technology for packetized voice, and Alcatel's DSL chip technology. Netergy Networks is a leading supplier of IP telephony technology and systems. Alcatel is the world's leading supplier of chipsets for DSL modems.

The agreement calls for the two companies to integrate their packetized voice and DSL technologies and to license to each other certain technologies critical to the implementation of voice over DSL solutions that are standards compliant.

The companies will jointly market the resulting solution to OEMs of DSL based integrated access devices (IADs). According to Forward Concepts, a market research firm, the market for VoDSL modems will exceed 1 million units in 2001. Alcatel is the dominant supplier of DSL chipsets for central office and CPE platforms, with more than 52% share of the ADSL chipset market (Source Dataquest 2000)

"Our agreement with Alcatel -- who are leaders in DSL solutions -- will further increase the penetration of our packet telephony technology in network access devices like DSL modems," said Dr. Paul Voois, Netergy Networks' chairman and CEO, "and it is further evidence that our DSP (digital signal processing), protocol and codec technology for packet telephony is among the world's best."

The two companies will first integrate their technologies by constructing a voice-capable DSL modem demonstration platform based on the Alcatel DynaMiTe MTK-20150 DSL chipset and the Netergy Audacity-T2 Processor, which will run Netergy Networks' Veracity Voice -over-packet call protocol stacks and audio codecs. In the second phase of the collaboration, Netergy Networks will build a version of the Audacity-T2 processor that connects directly to the DynaMiTe chipset. The final phase of the collaboration calls for the production of a next-generation, combined Netergy/Alcatel ADSL solution with integrated voice processing capabilities.

"In order for us to continue to maintain and grow our leadership position, we need to be able to offer our customers enhanced service capabilities. Clearly, the ability to deliver voice over DSL solutions has great momentum," stated Eric Schutz, vice president of Strategic Business Development for Alcatel Microelectronics Activities. "Netergy Networks' voice solutions are feature rich and proven to be fully interoperable with industry standards. The combination of their Veracity software and Audacity-T2 Processor with Alcatel's ADSL DynaMiTe chipset will make a compelling solution for our joint OEMs."

"We are pleased to be partnered with Alcatel for voice over DSL solutions," said Keith Barraclough, Netergy Networks' president and COO. "With more than half the market for DSL chipsets worldwide, Alcatel is the clear market leader. This agreement gives us access to the DSL market for our packetized voice technology, and is a terrific complement to both our network software business and to our other VoIP initiatives for cable and enterprise LANs."

About the Audacity-T2 IP Phone Processor

The Audacity-T2 IP Phone Processor integrates into a single chip all of the digital circuitry required to deliver voice over a packet network. The chip has a single Netergy MIPS-X5 CPU that efficiently processes both complex communications protocols and high-speed audio signal processing algorithms. The chip also integrates 256 Kbytes of 8-way interleaved memory, two Ethernet MACs and two multi-channel TDM ports. A 32-channel DMA engine and a 6.4 Gbyte/s Memory Controller automatically transfer data on- and off-chip, ensuring that MIPS-X5 cycles are spent on protocol and audio tasks and not on data movement. The Audacity-T2 Processor is currently sampling to customers.

About Veracity Voice-over-Packet Software Stacks

The Veracity software stacks include the call control protocol support, vocoders and audio modules necessary to build a complete voice over packet terminal or gateway. Protocols supported include H.323v2, MGCP and SIP. The Stacks include a complete range of ITU vocoders, including G.711, G.723.1, G.726, G.729A/B and G.729E. Audio modules include acoustic and line echo cancellation (G.165 and G.168), automatic gain control, comfort noise generation, voice activity detection, silence suppression, FAX/modem tone detection and dual tone multi-frequency (DTMF) generation and detection.

About Alcatel's ADSL DynaMiTe Chipset

DynaMiTe ADSL chipset family is multistandard compliant and features ANSI T1.413 Issue 2, G.992.1 (G.dmt), G.992.2 (G.lite) and ETSI/TM-06006 standard ADSL-over-ISDN. The DynaMiTe product family includes an optimized Customer Premises Equipment (CPE) chipset featuring dedicated system interface for Utopia and PCI applications and an optimized Central Office (CO) multiline implementation.

The DynaMiTe development kit includes the chipset, evaluation boards for both Central Office (CO) and Customer Premises Equipment (CPE) modems, as well as reference designs, full documentation, test and verification tools including Alcatel's DeTONEator software and full specifications.

About Alcatel

Alcatel builds next generation networks, delivering integrated end-to-end voice and data communications solutions to established and new carriers, as well as enterprises and consumers worldwide. With 120,000 employees and sales of EURO 21.3 billion ($25.0 billion), Alcatel operates in more than 130 countries. For more information on Alcatel's Microelectronics activities, go to http://www.alcatel.com/telecom/micro.

About Netergy Networks

Formerly known as 8x8, Netergy Networks is a leading provider of highly integrated IP telephony solutions to telephone service providers and telecommunication equipment manufacturers. Netergy Networks' IP telephony solutions include network software and systems as well as embedded technology. The company is based in Santa Clara, California, and has offices in France and the United Kingdom. For more information, visit Netergy Networks' web site at www.netergynet.com.

This press release contains forward-looking statements. The actual results of 8x8, dba Netergy Networks (the Company), may differ materially from the results discussed, implied or forecasted in the forward-looking statements due to factors including, but not limited to, the timing and successful completion of joint developments with Alcatel, the need for compliance with industry standards, delays in the adoption and acceptance of industry standards in the VoDSL telephony market, dependency on the growth of the market for VoDSL telephony products, the limits of existing VoDSL telephony technology, and current and potential competition. Further information on these and other factors that could affect the Company's actual results are included in the Company's Report on Form 10-Q for the quarter ended December 31, 1999, which is on file with the Securities and Exchange Commission. The Company assumes no obligation to revise or update any forward-looking statements contained in this press release.