Bay Networks Provides Market with First Industrial Strength, Portable Open Routing Software.

SANTA CLARA, Calif.--(BUSINESS WIRE)--June 24, 1998--

Portable open routing software to foster competition and innovation; will be available to all vendors

Leveraging over a decade of expertise in industrial strength routing software and systems design for the world's largest networks, Bay Networks, Inc. (NYSE:BAY) today announced the establishment of an independent line of business, the Bay Networks Open Routing Division, that will license and sell a portable version of Bay Networks Routing Services (BayRS)(TM) technology. The widespread availability of industrial class routing software, the critical foundation for scalable routing hardware platforms, provides a solution that insures full interoperability in the largest, most complex multi-vendor network environments. Licensees of BayRS technology also benefit from significant development at Bay Networks to enable compatibility with existing proprietary networking schemes.

Completion of this strategy includes the acquisition last week of Phase2 Networks, Inc., a leading provider of open Layer 3 routing and switching software. Headquartered in Durham, North Carolina, Phase2 Networks provides standards-based, portable and highly interoperable protocol implementations to over 50 leading network equipment vendors, consisting of both Fortune 500 and innovative start-up companies. Bay Networks will strengthen Phase2 Networks' portable software implementation with the Internet-proven reliability of BayRS software and deliver, through this channel of installed customers and all network equipment vendors, the world's first industrial strength, interoperable routing software.

"This compatibility with a significant number of established networking vendors is fostering a revolution of commonality in the spirit of widespread vendor interoperability. This is in the best interest of network users everywhere because it enables networks to run optimally in a multi-vendor environment," said Bill Hawe, vice president of architecture at Bay Networks. "By turbo-charging Phase 2 Networks' open protocol applications with the reliability of BayRS software in large, complex networks, routing and switching hardware vendors can build their products with rock solid routing code, and complete confidence in scalability and interoperability."

Phase2 Networks' comprehensive family of portable router source code was developed from inception to be operating system and processor independent, and provides the highest degree of interoperability between hardware vendors. BayRS software is Internet-hardened and IP-optimized, a result of significant development focused on IP through Bay Networks' Adaptive Networking strategy; and provides a full set of capabilities for implementing Quality of Service (QoS). In addition to providing vendors and systems integrators with a proven, interoperable routing code, this integration addresses the new trend of building routing chips optimized for IP, for which routing software must be scalable, resilient, robust and high performance.

"What has been missing up to this point with open routing software has been experience in very large networks, and the ability to interoperate with huge numbers of routers," said Ilan Carmi, vice president and general manager of the Routing Platforms Division at Bay Networks. "Leveraging the proven stability of BayRS software, Bay Networks is changing the game, by providing the industry with a powerful, open routing code that gives customers control and promotes innovation."

To provide full, cross-vendor interoperability worldwide, protocol applications must be able to run over different vendors' devices and platforms, and be transparent to the network users. With standards-based, interoperable routing software, network managers can effortlessly run applications over multiple vendors' products, building networks that are stable, easy to manage, and perform at optimum levels. In addition, with industrial strength routing code available, advanced technologies can be more readily deployed on top of reliable routing platforms.

"From its inception, Phase2 Networks has been an advocate of universal interoperability and has played an active role in promoting innovation in an open, rather than proprietary, environment," said Jeff Pickering, president of Phase2 Networks. "We are thrilled to be part of Bay Networks, and believe both vendors and users will benefit from this technology integration. This is a huge step in resolving the industry issue of true, global network interoperability."

Bay Networks began the trend of porting routing software to open operating system environments with the introduction last year of Microsoft's Routing and Remote Access Service (RRAS), code named Steelhead, in which the companies jointly developed routing application programming interfaces (API's) and integrated OSPF into the Windows NT Server product. The collaboration provides a hardware independent operating system with enterprise class routing capabilities for communications services such as branch office routing.

Phase2 Networks will continue to ship its open routing software products and Bay Networks Open Routing Division will continue to develop and create open, portable, interoperable routing software systems. At the same time, Bay Networks will leverage that momentum and further integrate these software modules as it creates an open and modular BayRS environment. The first Bay Networks portable routing software products will be announced at the end of this summer.

About Phase2 Networks

Headquartered in Durham, North Carolina, Phase2 Networks is a provider of the most widely used open Layer 3 routing and switching software in the networking industry. The company was founded in 1989, and has built an impressive base of over 50 customers, consisting of both Fortune 500 and start-up companies, the largest customer base in the market.

Networking hardware vendors save valuable engineering and time resources by porting Phase2 Networks' protocol implementations to their routing platforms through open Application Programming Interfaces (APIs). In the fast-paced network communication business, time to market is critical and Phase2 Networks' Announce products reduce engineering resources with ease of porting and therefore are time and cost effective in helping customers bring products to market quickly. Announce products include protocol software for ATalk, BGP, DNET, Iroute, IP, IPv6, Mroute, Nlink, OSPF, RPX, RSVP, and STP.

About Bay Networks

Bay Networks - Where Information Flows. Bay Networks, Inc. (NYSE:BAY) is a leader in the worldwide networking market, providing a complete line of products that serve corporate enterprises, service providers and telecommunications carriers. The company offers frame and ATM switches, routers, shared media, remote and Internet access solutions, IP services and network management applications, all integrated by Bay Networks' Adaptive Networking strategy. With headquarters in Santa Clara, California, Bay Networks markets its products and services around the world, providing 7x24 support coverage. For additional information visit the company's World Wide Web site at http://www.baynetworks.com or call 800-8-BAYNET.

This release, other than historical financial information, may consist of forward-looking statements that involve risks and uncertainties. These statements may differ materially from actual future events or results. For instance, factors which could cause results to differ from future events include the rate of adoption of new technology, competitive pricing actions and marketing programs, among others. Readers are referred to the documents filed by Bay Networks with the S.E.C., specifically the most recent reports on forms 10-K and 10-Q, which identify important risk factors which could cause actual results to differ from those contained in the forward-looking statements.

Bay Networks is a registered trademark of Bay Networks, Inc. Bay Networks - Where Information Flows and BayRS are trademarks of Bay Networks, Inc. Other brand and product names are registered trademarks or trademarks of their respective holders.

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