Nortel Networks Expands Cable Voice over IP Media Gateway Portfolio; Enables Cable Customers to Simplify Deployment of PacketCable Networks.

Business Editors/High-Tech Writers

RESEARCH TRIANGLE PARK, N.C.--(BUSINESS WIRE)--May 4, 2004

Furthering its commitment to the cable industry, Nortel Networks (NYSE:NT)(TSX:NT) is expanding its voice over Internet Protocol (VoIP) media gateway portfolio to give cable operators greater deployment options and support for standards-compliant, interoperable cable solutions.

Nortel Networks has signed a strategic agreement under which it will integrate, sell and support VoIP gateways from Nuera Communications, Inc. as part of an integrated PacketCable qualified solution. Both Nortel Networks softswitch and the Nuera media gateway are fully PacketCable qualified.

PacketCable is a CableLabs-led initiative that defines a common platform to deliver advanced, real-time communication services like VoIP. The integrated PacketCable solution announced today will incorporate key technologies from both companies to provide cable operators with support for Trunk Gateway Control Protocol (TGCP), the PacketCable protocol that enables communication between softswitches and media gateways.

Nuera's Orca BTX-21 and BTX-8 PacketCable qualified gateways will give Nortel Networks cable customers even greater cable VoIP deployment flexibility. These gateways will complement Nortel Networks VoIP media gateway portfolio, which includes Nortel Networks Passport Packet Voice Gateway (PVG). Passport PVG, which is currently deployed in four cable VoIP networks around the world, is an optimal solution for cable operators requiring a high density media gateway with support for more traditional protocols like H.248 and user interfaces like Primary Rate Interface (PRI) and V5.2.

"The BTX gateways are purpose-built for cable operators and have additional attributes cable operators are looking for -- support for the TGCP protocol in the PacketCable specifications and the ability to cost effectively address the market entry strategy of many Cable VoIP operators," said Dan Mondor, general manager, Global Cable Solutions, Nortel Networks. "By combining Nortel Networks PacketCable qualified softswitch with the industry's only TGCP PacketCable qualified media gateway, we are simplifying the integration and interoperability process for our cable customers."

The agreement between Nortel Networks and Nuera will uniquely position Nortel Networks as a leading softswitch vendor with demonstrated commitment to deploy the TCGP interface. Combining Nortel Networks Succession Communication Server (CS) 2000 softswitches with the flexibility and economics of Nuera's VoIP gateways will give cable operators a compelling solution for delivering new, revenue-generating cable telephony services over PacketCable architecture.

"CableLabs, through PacketCable qualification, is helping cable operators transform their networks by converging separate networks into one powerful packet architecture that enables innovative cable telephony and multimedia services," said Bill Ingram, chief executive officer, Nuera. "VoIP vendors must embrace interoperability and open standards to deliver on the full value of the PacketCable specifications. Our agreement with Nortel Networks is a huge step toward making that a reality for cable operators."

Cable operators who deploy Nortel Networks Succession Cable VoIP Solution with Succession CS 2000 softswitches and the BTX-21 and BTX-8 media gateways will have the assurance of deploying a fully integrated, tested cable VoIP solution. To further simplify the deployment process, Nortel Networks will also provide cable customers with engineering support, architecture design, and professional services for the combined product offering.

Nortel Networks is in a unique position to help cable operators create new revenue opportunities and reduce operational expenditures through comprehensive integrated cable solutions spanning video and video on demand, voice and multimedia communications, high-speed data services, managed network services for business customers and next generation access. The company continues to execute on three cable commitments: new product development geared specifically to cable applications, commitment to the technology and standards organizations which serve the cable industry, and implementing real-world solutions that address cable operators' fundamental business and networking challenges.

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 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 of its previously announced or filed financial results; the impact of the management changes announced on April 28, 2004; the impact of the inability to meet Nortel Networks filing obligations on credit and support facilities and public debt obligations; the sufficiency of Nortel Networks 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 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 control; Nortel Networks ability to recruit and retain qualified employees; fluctuations in Nortel Networks cash flow, level of outstanding debt and current debt ratings; Nortel Networks ability to meet the financial covenants in its credit facilities; 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, Nortel Networks cash flows and compliance with financial covenants; 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; risks associated with a consolidation of Nortel Networks common shares; 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.

Nortel Networks, the Nortel Networks logo, the Globemark , Business Without Boundaries, Passport and Succession are trademarks of Nortel Networks. PacketCable and CableLabs are trademarks of Cable Television Laboratories, Inc.