China's Largest Metropolitan Area Embraces Next Generation Services; Nortel Networks, China Netcom Join Hands in Bringing New Experience to Subscribers in Shanghai City.

BEIJING -- Shanghai Netcom, China Netcom's subsidiary in Shanghai, has launched new and advanced voice, data and multimedia services to both residential and business customers in Shanghai based on a next generation network (NGN) solution from Nortel Networks (NYSE:NT) (TSX:NT).

Nortel Networks NGN solution positions Shanghai Netcom to deliver innovative, full-featured, carrier-grade services on an Internet Protocol (IP) infrastructure, helping Shanghai Netcom reduce network management and operating costs, enhance customer experience and increase end-user mobility.

IP-based packet networks allow voice, video and data traffic, which traditionally run over separate networks, to be converged onto a single, high-speed broadband communications infrastructure.

Nortel Networks deployed an end-to-end NGN solution for Shanghai Netcom including Nortel Networks Succession Communication Server (CS) 2000-Compact superclass softswitches, Multimedia Communication Server 5200, Integrated Access Devices, Access Gateways and video phones.

"Shanghai Netcom has committed to leveraging cutting edge technologies in order to offer our customers the most advanced services available," said Zhou Renjie, general manager, Shanghai Netcom. "Our selection of Nortel Networks was based on its unparalleled experience in deploying numerous NGN networks worldwide, strong local presence, and industry-leading NGN solutions that have already proven to be capable of addressing our current needs and accounting for the future as our network requirements grow."

China's next generation network switching market is one of the most advanced in the region. After three years of technology evaluation and trials, commercial deployment of NGN is accelerating in the country. China Netcom, like all other major Chinese carriers, is using NGN switching as the key to opening new business markets and differentiating itself from competition. To date, China Netcom has implemented several provincial commercial networks across the country, including a three-city NGN deployment in Shandong Province based on Nortel Networks technologies.

With Nortel Networks solution, Shanghai Netcom has launched a range of advanced new services. These include: broadband telephony; IP Centrex for business customers to drive higher productivity and reduced operating costs; point-to-point video calling; 'meet me' audio conferencing; Web 'push services, file transfer, chat room, instant messaging and other collaborative Web tools; and Universal Personal Telecommunications (UPT), a personalized service that includes a single UPT number regardless of the terminal, network or basis telecommunications service used, and provides users with enhanced reachability and flexibility in creating personalized service profiles.

In addition, during the recently closed Chinese Grand Prix of 2004 FIA Formula One World Championship in Shanghai, Shanghai Netcom successfully delivered premium services to the first F1 event in China, using Nortel Networks NGN solutions.

"We are delighted to provide Shanghai Netcom with our NGN solution, which has been widely recognized by world leading operators for its carrier-grade reliability, scalability and capacity to supporting differentiating services," said Bob Mao, president and chief executive officer, Greater China, Nortel Networks. "China is a fast growing telecom market with huge potential, and we will continue to work closely with Shanghai Netcom and other Chinese carriers to bring increased functionality, mobility and productivity to their customers."

With a proven portfolio of products and services for packet voice and multimedia services, Nortel Networks is providing its carrier voice over packet solutions to a number of world leading operators, including Verizon Communications, Sprint, Bell Canada, Cable & Wireless, Charter Communications, Cox Communications and MCI.

Nortel Networks has long played an active and leading role in the commercialization of NGN in China. Nortel Networks has a research and development team in China focused on development and market customization of NGN solutions and responsive support to local customers. Nortel Networks passed the Ministry of Information Industry (MII) of China's certification test for NGN products in August 2002, becoming the first foreign NGN equipment vendor to do so. In addition to NGN deployments for China Netcom, Nortel Networks has also implemented NGN networks for China Railcom, China Telecom and China Unicom.

Nortel Networks Succession CS 2000-Compact softswitch enables service providers to deliver the full suite of traditional and enhanced voice services to business and residential customers on a packetized network, with voice and data traffic sharing the same communications lines to provide more efficient and cost-effective use of existing transmission capacity.

Nortel Networks Multimedia Communication Server 5200 is a SIP-based media and applications server platform. The MCS 5200 leverages an open, standards-based architecture and commercially available hardware and software, positioning service providers to offer advanced multimedia and collaboration applications for businesses and consumers.

For the entire year 2003 and the first half of 2004, Nortel Networks ranked #1 in the global markets for carrier packet voice and softswitch revenue, according to Synergy Research Group (SRG).

About Shanghai Netcom

China Netcom is among the largest fixed line operators in China. With dominant markets in 10 northern provinces, China Netcom has 108 million fixed-line subscribers and 8 million PHS subscribers at the end of May 2004. Shanghai Netcom is a major subsidiary of China Netcom in Eastern China. With the re-consolidation of China's telecom industry, Shanghai Netcom has become one of the major telecom operators in Shanghai City, providing a full spectrum of broadband Internet access and telecom services and solutions. More information about Shanghai Netcom and China Netcom can be found at http://sh.cnc.net.cn and www.chinanetcom.com.cn.

About Nortel Networks

As a global innovation leader, Nortel Networks enriches consumer and business communications worldwide by offering converged multimedia networks that eliminate the boundaries among voice, data and video. These networks use innovative packet, wireless, voice and optical technologies and are underpinned by high standards of security and reliability. For both carriers and enterprises, these networks help to drive increased profitability and productivity by reducing costs and enabling new business and consumer services opportunities. Nortel Networks does business in more than 150 countries. For more information, visit Nortel Networks on the Web at www.nortelnetworks.com or www.nortelnetworks.com/media_center.

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 outcome of Nortel Networks independent review and planned restatement or revisions of its previously announced or filed financial results; the impact of the management changes announced on April 28, 2004 and August 19, 2004; the impact of the inability to meet Nortel Networks filing obligations on support facilities and public debt obligations; the sufficiency of Nortel Networks restructuring activities, including the work plan announced on August 19, 2004 as updated on September 30, 2004, including the potential for higher actual costs to be incurred in connection with restructuring actions compared to the estimated costs of such actions; cautious or reduced spending by Nortel Networks customers; fluctuations in Nortel Networks operating results and general industry, economic and market conditions and growth rates; the communication by Nortel Networks auditors of the existence of material weaknesses in internal controls; Nortel Networks ability to recruit and retain qualified employees; fluctuations in Nortel Networks cash flow, level of outstanding debt and current debt ratings; the use of cash collateral to support Nortel Networks normal course business activities; the dependence on Nortel Networks subsidiaries for funding; the impact of Nortel Networks defined benefit plans and deferred tax assets on results of operations and Nortel Networks cash flows; Nortel Networks dependence on new product development and its ability to predict market demand for particular products; Nortel Networks 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 Nortel Networks 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 Nortel Networks purchase contracts; the impact of Nortel Networks 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 Nortel Networks strategic alliances; and the adverse resolution of litigation, investigations, 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/A and Form 10-K/A 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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