BT Deploys Secure VPNs from Nortel Networks for Fixed, Wireless Broadband Access; 60,000 Remote Employees Also Expected to Benefit from Secure Internet Connections.

Business Editors & High Tech Writers

LONDON--(BUSINESS WIRE)--Jan. 14, 2003

BT has deployed Contivity Secure IP Services Gateways from Nortel Networks (NYSE:NT)(TSX:NT) to support enterprise customer demand for secure remote access to office applications at virtually any time and from virtually anywhere.

BT is also preparing to use this same network to provide 60,000 BT `teleworkers' with remote access to the same applications typically available only in the office.

"At BT Retail, we fully support and understand the benefits of deploying broadband technology in a flexible working environment," said Pierre Danon, chief executive, BT Retail. "Teleworking has become a fact of life that businesses such as ours are already embracing. This helps us reduce fixed assets costs while offering a more `agile' organization and opening a range of new opportunities to our employees."

"Security has always been a priority, but with Nortel Networks Contivity solutions we are enabling our customers and our employees to take full advantage of the Internet with secure communications across the network," Danon said. "This is a good example of the added value our strategic relationship provides."

BT Openzone Wireless LAN (local area network) `access points' already integrate Nortel Networks Contivity Gateways, enabling business travelers and teleworkers to easily and securely establish high-speed connections to their corporate networks, e-mail and the Web.

"Datamonitor definitely sees this announcement as a step in the right direction," said Ian Williams, senior security analyst, Datamonitor. "Most companies realize the potential benefits of teleworking, but lack of available bandwidth has limited the functionality of remote access services. By offering the increased capacity of a wireless LAN solution, more data intensive applications can be provided."

"Securing wireless LANs, however, has always been seen as a major problem with the technology because there is little faith in the proprietary WEP security protocol," Williams said.

"In a recent Datamonitor survey, 51 percent of European organizations indicated that wireless LAN security is a major concern for them," Williams said. "Running VPNs over any wireless LAN is an effective way of ensuring data confidentiality, and this is particularly important for remote access services, where security has always been a strong inhibitor."

As Nortel Networks customer premise-based, purpose built IP (Internet Protocol) services platform, Contivity allows service providers to offer a range of security services. Contivity's integrated capabilities - including IPSec tunneling, stateful firewalling, PKI, authentication, directory services (LDAP), network address translation (NAT), and IP routing - are designed to provide end users with more reliable and scalable network security and remote access at reduced cost.

"Agility has become the mantra for modern business, and the Contivity Secure IP Services Gateways portfolio is an example of how Nortel Networks is leading the way in creating the next generation of advanced, converged `one network' communications," said Peter Kelly, president, Enterprise Networks, Nortel Networks EMEA (Europe, Middle East, Africa). "Today we are able to offer true choice to employees who are in a different location every day, allowing them to use their mobile phones and their laptop as `virtual offices.'"

BT Retail is one of the businesses that make up the BT Group. Others include BT Ignite, BT Wholesale, BT Openworld and BTexact Technologies. BT Retail is the UK's leading communications service provider and the prime channel to market for the other businesses in the Group. It has 21 million residential and business customers.

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 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.

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