August 15, 2005 17:23 ET

Nortel Shares Views on Canadian Telecom Policy, Regulatory Reform; Calls for Canadian National ICT Strategy

OTTAWA--(CCNMatthews - Aug 15, 2005) -

Nortel (NYSE:NT)(TSX:NT) submitted a report today outlining its perspective on the changing telecommunications landscape and the resulting impact on policy, regulation and the Canadian economy. The report puts forward 15 practical recommendations to the federal government, including a Canadian national strategy for information and communication technology (ICT).

Nortel submitted the report to the Telecommunications Policy Review Panel which was established by the Minister of Industry in April to conduct a review of Canada's telecom policy and regulatory framework.

"At no time has the development of a telecom policy been more critical to Canada's future," said Brian McFadden, chief research officer, Nortel. "In today's highly competitive global market, Canada's traditional leadership in many areas of telecommunications has been eroded. We must move quickly to build on past successes by establishing a bold national strategy that ensures Canada can compete at the forefront of the 21st century information economy."

"The creation and deployment of new, technology-based applications and services will be critical to the success of businesses across all segments of the Canadian economy," McFadden said.

Nortel's report presents recommendations in response to specific questions identified by the Telecommunications Policy Review Panel in its Consultation Paper issued in June. Central among Nortel's recommendations is the creation and implementation of a Canadian national ICT strategy led by the Prime Minister and Cabinet and focused on a holistic and coordinated approach to strengthening Canada's international competitiveness in communications technology and services.

"As a nation of 32 plus million people striving for leadership in the global marketplace, we need to ask ourselves what we are going to be really good at," McFadden said. "Communications technology is a Canadian strength and should be nurtured."

"A national ICT strategy -- championed by the highest levels of government -- would unleash Canada's ability to be a leading global innovator and exporter of the world's best multimedia, mobile and personalized communications technologies," McFadden said.

In its report, Nortel also outlines its vision for how networks will evolve and how new technologies necessitate a reset of Canadian telecom regulation. Advanced technologies -- such as IP and wireless -- are fundamentally changing the way communication services are delivered and the way they are used.

Nortel suggests that national telecom policy should reflect these changing realities as well as nurture ongoing development of a secure and intelligent network infrastructure that is critical to delivery of advanced new services and Canada's competitiveness.

Among Nortel's other recommendations are a review of tax incentives for innovation and productivity, changes to spectrum management for wireless services, an increased focus on the protection of intellectual property rights, a government procurement policy that ensures governments are showcase users of Canadian ICT, a lead role in the development of global standards, and support for a broadband development program, especially in rural and remote areas.

To view Nortel's submission to the Telecommunications Policy Review Panel, visit

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 For the latest Nortel news, visit

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.

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