OTTAWA -- Bell Canada, in conjunction with Aliant and Bell West, today announced that it is teaming up with Nortel Networks (NYSE/TSX: NT) to build Canada's most advanced Next Generation Network (NGN) based on Internet Protocol (IP). Through a comprehensive agreement with Nortel Networks that includes a joint research and development initiative, Bell Canada will deliver to Canadians the latest IP telephony and multimedia applications and services, providing simplified communications that increase customers' functionality, mobility and productivity.

"IP telephony will fundamentally alter the way people communicate with one another over our network, with the same impact that the Internet itself has had," said Michael Sabia, Chief Executive Officer of BCE and Bell Canada. "Bell's Next Generation Network is a key building block in our drive to create and deliver simplicity for our customers. It represents a "One Network" approach to the development and delivery of services; a platform for innovation within Bell; and a gateway to simplicity for our customers."

Initially, Bell Canada plans to invest CDN$200 million (approximately US$146 million) over three years in Nortel Networks technology to provide new services to its large enterprise customers. Bell also intends to expand this new infrastructure to enable the delivery of Next Generation services to its small and medium business customers. The company will be able to move to new network infrastructure in a cost efficient manner because its current systems are built on Nortel Networks digital switching technology. The Next Generation Voice over Internet Protocol (VoIP) and Multimedia Network is easily integrated with little or no displacement of existing technologies. Because of Bell Canada's past network planning initiatives, the move to IP is evolutionary as opposed to a totally new network implementation.

"Today's announcement is consistent with Nortel Networks global vision of transforming networks, eliminating boundaries, and enriching communications," said Frank Dunn, president and Chief Executive Officer, Nortel Networks. "We are on the edge of a new era in telecommunications - one in which the superior delivery of integrated voice, video, and data dramatically enhances how, when and where people communicate with full mobility. With our VoIP and multimedia technology, making a video call, sharing electronic documents, and sending text messages come together in one environment with ease. For enterprises and employees, work becomes a thing to do, not a place to go."

Bell Canada and Nortel Networks Innovation Centre

Bell and Nortel Networks plan to create an Innovation Centre in Ottawa focused on creating new services based on IP Telephony and multimedia standards, while working with third parties to address compatibility issues and increase the speed to market for new applications. Bell also plans several associated research and development satellite labs in Quebec, Ontario and in areas served by Aliant, which are also part of the Next Generation Network Program.

The Innovation Centre will initially focus on new voice and multimedia applications over both wireline and wireless facilities. Specifically, the service will be designed for a "hosted" IP network infrastructure. "Hosted" means customers will be given a complete one-stop package by Bell. Bell will build and manage the new network, relieving its customers of any concern over capital investment or technology issues.

"The Internet has become the great enabler of the new, knowledge-based economy and a powerful force behind the accelerating pace of change and innovation within the Canadian telecommunications sector and around the world," added Mr. Sabia. "IP Telephony is the new frontier for the industry and Bell and Nortel Networks have been here before. We have worked together for many years on the introduction of virtually every generation of technology, from dial to digital, helping Canada earn and keep its leading position in communications. This is all about innovation and leadership, about investing in our collective future."

The new Innovation Centre will complement and extend the work of Bell's iTechCentre, a CDN$50 million lab established in 2001 to test new IP-based technologies and services.

Bell Canada

Aliant Inc.

Nortel Networks Corp.