Nortel CEO Urges U.S. Government to Adopt ``Extraordinary Measures''

Nortel CEO Urges U.S. Government to Adopt ``Extraordinary Measures'' to Help Accelerate Broadband Deployment in Rural America

    Business Editors/High-Tech Writers

    WASHINGTON--(BUSINESS WIRE)--Jan. 13, 2005--Rural America faces a new economic threat and risks being left out of the new Information Economy unless government adopts measures to accelerate the deployment of broadband across the country, Nortel (NYSE:NT)(TSX:NT) President and Chief Executive Officer Bill Owens said at a policy luncheon earlier today in Washington.
    The Capitol Hill event also featured Commissioner Kathleen Abernathy of the Federal Communications Commission (FCC) and David Hudgins, chairman of the Mid-Atlantic Broadband Cooperative. Attended by more than 100 government officials, congressional staff members and business leaders, the event was the latest in a series of seminars convened by Nortel to promote dialogue on key policy issues.
    "Information and technology are increasingly becoming integral parts of the national and global economy," Owens said. "If rural America does not have ready access to this information and the infrastructure on which it is delivered, we will see the gap in opportunity and prosperity widen between rural and urban America."
    "The federal government, communities and industry can help alleviate this potential threat by adopting creative and extraordinary measures to help accelerate the deployment of broadband across the country, particularly in rural areas that can be more expensive to serve. While I recognize that the FCC and Bush administration have made broadband deployment a national priority and taken needed steps, there is still more that should be done," Owens said.
    Nortel believes the United States should have eight top priorities for rural broadband deployment:

--	Creation of a federal regulatory framework for broadband to remove the uncertainty which deters carrier investment
--	Setting a goal to bring at least 10 to 20 Mbps of bandwidth to every subscriber in America in the near term and 100 megabits within the next decade
--	Providing tax incentives to carriers to invest in broadband infrastructure
--	Supporting development of wireless and other technologies for rural broadband service
--	Allocating tobacco settlement and other government funds to support deployment of broadband in rural areas
--	Employing multiple channels to enhance the skills needed by rural citizens to get the most out of broadband for improved healthcare, education, business, commerce and quality of life
--	Building government/community/industry partnerships to create new services and applications
--	Fostering commitment in rural communities to deploying services and applications in a way that will move local economies

    In her presentation, Commission Abernathy discussed the regulatory challenges facing the United States in realizing its broadband vision.
    "The FCC and the Administration have made it a national priority to facilitate greater broadband deployment, and this goal is nowhere more critical than in rural America," Abernathy said. "Broadband technology can enrich our lives by creating new economic opportunities, improved education and health care, and many other benefits. The Commission therefore has worked hard to encourage increased investment in wireline and cable networks, to allocate additional wireless spectrum and grant increased flexibility to licensees, and to encourage the development of new broadband services over satellites and power lines. We will continue these efforts and more in the coming year."
    Hudgins discussed the work of the Mid-Atlantic Broadband Cooperative.
    "As global competition continues to impact our manufacturing in Virginia, we look to this broadband deployment to bring in the 21st century companies whose jobs will not be off-shored," Hudgins said. "The Mid Atlantic Broadband Cooperative is the owner of an advanced 700 mile open access world class network. We will change the economy of southern Virginia for the better."

    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 August 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 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.

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CONTACT: Nortel Ann Fuller, 613-768-1208 email: afuller@nortelnetworks.com or Dittus Communications John Pappas, 202-715-1514 email: john.pappas@dittus.com

KEYWORD: TEXAS DISTRICT OF COLUMBIA INDUSTRY KEYWORD: GOVERNMENT HARDWARE TELECOMMUNICATIONS SOFTWARE NETWORKING SOURCE: Nortel

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