Nortel Packet Voice Core Product Enhancements Boost Wireless Network Efficiencies to Reduce Operator Costs.

NEW ORLEANS -- Nortel (NYSE:NT)(TSX:NT) has introduced significant product enhancements to its wireless packet voice core product portfolio for GSM and UMTS operators designed to significantly reduce operating costs and increase network efficiency while improving voice quality for subscribers.

Nortel's packet voice core technology builds on the next generation of Third Generation Partnership Project (3GPP) Release 4 standards, commonly known as R4. This technology can reduce operator costs by enabling more efficient use of transmission capacity and reducing the amount of network equipment required to support wireless backhaul.

"Wireless operators recognize that packetizing their voice core network is a critical factor in driving network efficiencies and improving the subscriber experience," said Peter MacKinnon, president, GSM/UMTS, Nortel. "Our R4 solution leverages our expertise across wireless, wireline and packet technology to position operators for success."

Unlike traditional circuit-switched Mobile Switching Centers (MSCs), R4 technology makes use of Call Servers and Media Gateways that separate the call control software and the physical ports carrying the voice calls. In addition to lowering the cost of switching and transporting calls, Nortel's R4 solution provides operators with advanced software features that improve voice quality for subscribers. Nortel R4 technology allows wireless operators to reduce operational costs with minimal capital expenditures.

The enhancements include the following:

--Introduction of VSP4 Card -- Nortel is introducing fourth generation VSP technology, the VSP4 card, built on Nortel's extensive experience with packet voice gateway technology since shipments of VSP1 began in 1999. The VSP4 card provides packet network switching and routing for voice channels as well as support for special functions such as lawful intercept, conference calling, tones and announcements.

--IP based Signaling -- Nortel is introducing IP based signaling for GSM and UMTS operators to be able to transport the signaling traffic over an IP network based on 3GPP standards. This will enable operators to deploy high speed next generation signaling interfaces and a greater number of signaling links. This functionality will reduce the footprint requirement by two-thirds for signaling equipment and reduce the backhaul cost significantly for signaling traffic.

--Voice Compression -- This functionality provides a solution for compressed voice traffic over packet backbone networks. This enhancement will reduce the bandwidth requirement by almost 75 percent for traffic between media gateways on the packet backbone.

--Voice Quality Features -- Nortel's media gateway supports integrated Echo Cancellation as well as advanced voice quality processing features, many of which are patented Nortel features. Voice quality features are designed to ensure that wireless packet voice quality is as good as, or better than, traditional TDM voice service quality.

Nortel is currently deploying R4 technology in several major markets across Cingular Wireless' national GSM network. In addition, Nortel recently announced a GSM/GPRS/EDGE upgrade with Telecommunications Services of Trinidad and Tobago, Limited (TSTT), which will include R4 technology. Upon completion of these two projects, Nortel will have deployed over two million ports of its R4 solution in the Americas.

The R4 enhancements further reinforce Nortel's strong momentum in voice over packet technology (VoP). Nortel has announced customer deployments across all four VoP market segments: local, long distance, cable and wireless. Nortel currently holds the #1 market share position in service provider softswitches and gateway ports, according to Synergy Research Group, In-Stat/MDR and the Dell 'Oro Group.

Nortel has designed, installed and launched more than 300 wireless networks in over 70 countries. Nortel was the industry's first supplier with wireless networks operating in all advanced radio technologies (GSM/GPRS/EDGE, CDMA2000 1X and 1xEV-DO, UMTS and WLAN), and is the only end-to-end provider of all next generation wireless solutions.

About Nortel

Nortel is a recognized leader in delivering communications capabilities that enhance the human experience, ignite and power global commerce, and secure and protect the world's most critical information. Serving both service provider and enterprise customers, Nortel delivers innovative technology solutions encompassing end-to-end broadband, Voice over IP, multimedia services and applications, and wireless broadband designed to help people solve the world's greatest challenges. Nortel does business in more than 150 countries. For more information, visit Nortel on the Web at www.nortel.com. For the latest Nortel news, visit www.nortel.com/news.

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 regulatory and criminal investigations and civil litigation actions related to Nortel's restatements and the impact any resulting legal judgments, settlements, penalties and expenses could have on Nortel's results of operations, financial condition and liquidity; the findings of Nortel's independent review and implementation of recommended remedial measures; the outcome of the independent review with respect to revenues for specific identified transactions, which review will have a particular emphasis on the underlying conduct that led to the initial recognition of these revenues; the restatement or revisions of Nortel's previously announced or filed financial results and resulting negative publicity; the existence of material weaknesses in Nortel's internal controls over financial reporting; the impact of Nortel's and NNL's failure to timely file their financial statements and related periodic reports, including breach of its support facility and public debt obligations and Nortel's inability to access its shelf registration statement filed with the United States Securities and Exchange Commission ("SEC"); ongoing SEC reviews, which may result in changes to our public filings; the potential delisting or suspension of Nortel's and NNL's publicly traded securities; the impact of management changes, including the termination for cause of Nortel's former CEO, CFO and Controller in April 2004; the sufficiency of Nortel's 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's customers; fluctuations in Nortel's operating results and general industry, economic and market conditions and growth rates; fluctuations in Nortel's cash flow, level of outstanding debt and current debt ratings; Nortel's ability to recruit and retain qualified employees; the use of cash collateral to support Nortel's normal course business activities; the dependence on Nortel's subsidiaries for funding; the impact of Nortel's defined benefit plans and deferred tax assets on results of operations and Nortel's cash flow; the adverse resolution of class actions, litigation in the ordinary course of business, intellectual property disputes and similar matters; Nortel's dependence on new product development and its ability to predict market demand for particular products; Nortel's 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's 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, which is currently not available, of Nortel's forward purchase contracts; the impact of Nortel's 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; and the future success of Nortel's strategic alliances.

For additional information with respect to certain of these and other factors, see the most recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q filed by Nortel with the SEC. Unless otherwise required by applicable securities laws, Nortel 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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