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February 27, 2004

Nortel Networks Passes U. S. Defense Department Voice over IP Interoperability Test

Joint Interoperability Test Command Validation Enables Potential Voice over IP Deployments connecting to the Defense Switched Network

WASHINGTON – Nortel Networks* [NYSE/TSX: NT] announced that it was the first networking vendor to pass voice over IP (Internet Protocol) interoperability testing for the U.S. Defense Department’s Joint Interoperability Test Command (JITC) and receive the intent to certify. JITC certification testing is required for all products that support voice, data or video communications connecting to the Defense Switched Network.

“Our latest voice over IP research concludes that 76 percent of IT executives rate standards compliance and interoperability as vital or very important,” says Robin Gareiss, principal research officer for Nemertes Research. “Receiving the Defense Department’s voice over IP intent to certify underscores Nortel Networks ability to address this compelling concern among IT professionals across all industries. Given the stringent requirements of the Defense Department for reliability, interoperability, and cost-effectiveness, its acceptance of Nortel Networks products validates that voice over IP is quickly becoming a mature, dependable technology.”

“Demonstrating that Nortel Networks portfolio can perform under the most trying circumstances is critical not only for our military customers, but also for enterprises requiring secure, reliable solutions that are proven to withstand operations under worst-case scenarios,” said Jim Biard, vice president, Federal Business, Nortel Networks.

The JITC certification process, coordinated by the Defense Information Systems Agency (DISA), entails an arduous regimen of system and interoperability tests. JITC certification ensures that products are secure, operate without performance degradation in a multi-vendor environment, possess exacting levels of resiliency and redundancy to ensure reliability under duress, and offer the unique military features and functionality required for national security.

As a combat support agency, DISA is responsible for planning, engineering, acquiring, fielding and supporting global net-centric solutions and operating the Global Information Grid to serve the needs of the president, vice president, secretary of defense, joint chiefs of staff, combatant commanders, and other Defense Department components during both war and peace.

The JITC-tested voice over IP solution from Nortel Networks includes:
  • Nortel Networks Succession* 1000M, which provides comprehensive IP telephony solutions through deployment of new systems and evolution of existing systems to optimize previous investments.
  • Nortel Networks BayStack* 460-24T-PWR Power over Ethernet Switch, which supports fast Ethernet connectivity in the local area network. BayStack 460 provides standards-based Power-over-Ethernet to support power requirements for IP telephony handsets, wireless access points, and network cameras.
  • Nortel Networks Contivity* Secure IP Services Gateway, which provides security and IP services in a single, integrated platform that supports IP routing, up to 2,000 Virtual Private Network (VPN) tunnels, stateful firewall inspection, policy management, and Quality of Service (QoS).
  • Nortel Networks Passport* 8600 Routing Switch, a scalable, reliable, secure and intelligent network routing solution enabling fast and efficient traffic classification, policy enforcement, Quality of Service (QoS) and filtering tuned for time-sensitive applications such as video, voice and personalized content.

Nortel Networks received VoIP interoperability intent-to-certify notification from DISA on February 24, 2004. In August 2000, Nortel Networks was the first manufacturer to achieve JITC certification of any kind, and Nortel Networks offers a broad range of JITC-certified networking solutions. Achieving JITC certification strengthens Nortel Networks’ leadership position in meeting the networking needs of the Defense Department.

Communications equipment purchased by the Defense Department for connection to the Defense Switched Network (DSN) is required to demonstrate interoperability and achieve JITC certification. This requirement for JITC certification is included in Public Law 107-314, SEC 353: “Installation and Connection Policy and Procedures Regarding Defense Switch Network,” as well as Department of Defense Instruction Number 8100.3, “Department of Defense (DoD) Voice Networks’ signed January 16, 2004 by John Stenbit, chief information officer and assistant secretary of defense for Command, Control, Communications and Intelligence, U.S. Department of Defense.

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.

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 sufficiency of our 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 our customers; fluctuations in operating results and general industry, economic and market conditions and growth rates; the communication by our auditors of the existence of material weaknesses in internal control; the ability to recruit and retain qualified employees; fluctuations in cash flow, the level of outstanding debt and our current debt ratings; the ability to meet the financial covenant in our credit facilities; the use of cash collateral to support our normal course business activities; the dependence on our subsidiaries for funding; the impact of our defined benefit plans and our deferred tax assets on our results of operations, cash flows and compliance with our financial covenant; the dependence on new product development and our ability to predict market demand for particular products; the 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 our 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 our purchase contracts; risks associated with a consolidation of our common shares; the impact of 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 our strategic alliances; and the adverse resolution of litigation, 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 and Form 10-K 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, Succession, BayStack, Contivity and Passport are trademarks of Nortel Networks.

Contact for Press and Analysts:

Dana Hughens
Nortel Networks
(615) 432-4636
dhughens@nortel.com

Pat Cooper
Nortel Networks
(408) 421-4614
pat.cooper@nortel.com

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