Nortel Softswitch Receives PacketCable 1.1 Qualification; Ensures Nortel's Communication Server 2000 Interoperates with Cable Operator Networks Worldwide.

RESEARCH TRIANGLE PARK, N.C. -- Nortel (NYSE:NT)(TSX:NT) today announced that its Communication Server 2000 (CS 2000) achieved PacketCable 1.1 softswitch qualification.

CableLabs, a non-profit research and development consortium representing the cable industry, has awarded PacketCable Media Gateway Controller (MGC) and Call Management Server (CMS) qualification to Nortel CS 2000 in this certification wave.

CableLabs Qualified means that the device has passed a series of tests for compliance with the indicated version of PacketCable and has thus demonstrated interoperable functionality with other "CableLabs certified/qualified" devices. "CableLabs Certified" is awarded to devices that will be used in a residence or business. "CableLabs Qualified" is awarded to devices that are used in a cable operator's network.

"We congratulate Nortel on achieving another PacketCable qualification milestone," said Dr. Richard R. Green, president and chief executive officer, CableLabs. "We thank Nortel for its continued commitment to the PacketCable program."

Nortel's CS 2000 was successfully tested in this certification wave against the latest in Lawfully Authorized Electronic Surveillance Specification (LAESS) and Event Messaging specifications. The LAESS specification focuses on softswitches and their ability to deliver lawful intercept capabilities within the PacketCable architecture. Support of event messaging allows cable operators to generate call records for downstream billing and customer usage tracking, following the PacketCable architecture. The CS 2000 PacketCable 1.1 Qualification success follows earlier PacketCable 1.0 CMS and MGC Qualifications in 2003 and 2004, respectively, and Euro PacketCable 1.0 qualification in 2004.

"We have generated critical momentum in the cable market and continue to focus efforts enabling cable providers to pave the way for new integrated video, voice, and data services offerings," said Dan Mondor, general manager, Global Cable Solutions, Nortel. "PacketCable qualification is a significant milestone in Nortel's cable strategy to deliver proven, interoperable solutions that drive innovative cable applications and directly address the fundamental business and networking challenges that cable operators face today."

IP-based packet networks enable a wide range of multimedia services, such as basic and advanced IP telephony services, multimedia conferencing, interactive gaming, and general multimedia applications.

PacketCable provides several inherent benefits for providers as services will be delivered more efficiently and at lower cost over the broadband cable access network. PacketCable specifications also allow qualified vendors to achieve interoperability, ease cable operator inter-working, and reduce costs through economies of scale.

The PacketCable architecture defines generic functions across the cable VoIP solution. In the softswitch core, PacketCable defines two functional elements. The CMS is responsible for delivering call control and call feature functionality over the cable access network. The MGC is responsible for the interface and management of communication with PSTN gateways in the Cable Operator's network. Nortel's CS 2000 provides both CMS and MGC elements.

Nortel is providing PacketCable qualified solutions to many leading cable operators, including Adelphia, Cable Onda, Charter Communications, Cox Communications, Dacom, Intercable, ish, Kabel BW, Rogers Cable, TeleCable and Telenet.

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, and any related potential dilution of Nortel's common shares; 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 control over financial reporting and the conclusion of Nortel's management and independent auditor that Nortel's internal control over financial reporting is ineffective, which could continue to impact Nortel's ability to report its results of operations and financial condition accurately and in a timely manner; the impact of Nortel's and NNL's failure to timely file their financial statements and related periodic reports, including 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 Nortel's and NNL's public filings; 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 and December 14, 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; increased consolidation among Nortel's customers and the loss of customers in certain markets; 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 monitoring of the capital markets for opportunities to improve its capital structure and financial flexibility; 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 and consolidation 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 of Nortel's forward purchase contracts; negative developments associated with Nortel's supply contracts and contract manufacturing agreements, including as a result of using a sole supplier for a key component of certain optical networks solutions; 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; any undetected product defects, errors or failures; 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.

Nortel, the Nortel logo and the Globemark are trademarks of Nortel Networks. CableLabs and PacketCable are trademarks of Cable Television Laboratories, Inc.