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The New Market Reality Wireless Data Networks Scott Wickware Director, UMTS Product Solutions

The New Market Reality Wireless Data Networks Scott Wickware Director, UMTS Product Solutions. Nortel Networks Industry Leader and Innovator. US $17.5B in Revenue in 2001 Customers in over 150 countries US $3.2B in R&D in 2001 1/3 of employees are engineers, designers & scientists

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The New Market Reality Wireless Data Networks Scott Wickware Director, UMTS Product Solutions

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  1. The New Market RealityWireless Data NetworksScott WickwareDirector, UMTS Product Solutions

  2. Nortel NetworksIndustry Leader and Innovator • US $17.5B in Revenue in 2001 • Customers in over 150 countries • US $3.2B in R&D in 2001 • 1/3 of employees are engineers, designers & scientists • Leadership Categories (HQ in Brampton, Canada) • Wireless Networks (Châteaufort, France) • Wireline Networks (Richardson , Texas, USA) • Optical Networks (Montréal, Québec, Canada) • Enterprise Networks (Santa Clara, California, USA)

  3. Wireless Data Market Drivers Europe Wireless Growth FlatWireless Data Growth Internet Growth 20%+ - 190M North America Wireless Sub & MOU Growth Wireless Revenue Growth Internet Users Flat – 182M Asia Wireless Sub Growth Wireless Data Growth Internet Growth 20% - 187M South America Wireless Sub Growth Lowest Cost Service Strong Internet Growth – 33M Overall Subscribers still growing Voice traffic still growing Wireless Data traffic rising Internet Usage rising (18% annually) Nua Internet Surveys

  4. 1H02 Subs 134M 1H02 MOU 296M 1H02 Revenue $37B • Global Internet - # of Hosts • >25% annual growth • Exceeds 162M globally Network & Traffic Growth Examples US Wireless in 1H 2002 Revenues & Subs growing - MOU growing faster CTIA ISC

  5. The New Reality: Access is Wireless FixedDevices MobileDevices Mobile now exceeds Fixed in almost 100 countries Source: ITU, 2001

  6. US Backbone Traffic (Exabytes) Millions of Mobile IP Users: Global Total Service Revenue: US Traffic & Revenue Don’t Match • Business Case is shifting • Traffic is Data • Revenues are Voice • Volume is growing • Low Service Cost is critical Source: Nortel & analyst estimates

  7. Voice Business Cycle is Ended Application BusinessCycle is Starting Wireline Voice Analog & 2G Wireless Voice Business Case VoP and Packet Data 2.5G and 3G Wireless Voice & Data Business Case Industry needs to redefine itself The End of the Voice ONLY Business Case 3G License Debt Bandwidth Bubble Over Investment Recession

  8. Fundamentals of the New Business Case • Core Networks evolve to low cost Packet Architecture • Voice and data treated homogeneously • Low cost broadband Wireless access • High mobility voice and thin applications • Nomadic bandwidth-intensive applications • Application Enablers • Service Management: making a business of applications • Network Applications: building blocks to tap network capabilities • Media Gateways: interfaces for multiple networks & traffic types • Service Integration: support for third party apps and services • Carrier Business Evolution • From Traffic management, to Retailing and Marketing

  9. Universal solution in the Core:Packet Transport & Switching TelecomSynchronous / Circuit Wireline / Wireless Voice Optimized DatacomAsynchronous / Routed Wireline / Optical Data Optimized Nortel Packet CoreCarrier-Grade Platforms, Multi-Service Switching & Optical Transport

  10. Broadband Wireless Access:Two Solution Sets – Mobile & Nomadic Telecom / Voice Datacom / WLAN Mobile Voice and <2Mbps Data 2.5G / 3G network Real-time voice & data applicationsUbiquitous coverage Nomadic Data 2Mbps+ Best-effort data applicationsLocal coverage, Mbps speeds Nortel Wireless AccessGPRS / EDGE / CDMA2000 / UMTS / WLAN

  11. Applications Development & Delivery:Ecosystem Tools & Support Service ManagementCommercialization services such as billing, metering, SLA support, & ecommerce Network ApplicationsCommercial grade services such as VPN, Firewall, Security, VoP, Authentication, QoS, SIP, etc. ApplicationsDeveloper driven such as MMS, SMS, WAP, xTML, email etc. Service IntegrationNetwork integration for third party servers and applications with core network services Media GatewaysApps built on industry standards such as IMS for voice, data, & video; wireline and wireless

  12. Nortel’s Value Proposition:Packet Traffic: End to End Care & Delivery Packet Core: low-cost, high performance connectivity • Integrated Optical and Wireline packet transport networks • Support for multiple services: IP, ATM, MPLS, etc. • 1x CDMA upgrades, UMTS overlays for dense GSM/GPRS • 802.11 PWLAN today, evolving to mesh extensions in future • Support the creation, deployment, and billing of IP services • Switch, route, repair, manage, secure & prioritize Packets • Simple, high performance network elements • Common across Optical, Wireline, and Wireless networks Efficient Access: matched to growth & usage Service Enablers: supporting revenue creation & collection Carrier-grade Platforms: Pre-engineered performance

  13. Market Update: Wireless Data Today Hutchison Soft-launch Bell Mobility 5k 1x data Subscribers Mobilkom Soft-launch Sprint 1x launched Vodafone Soft-launch Vodafone live! Unicom 1x Pilot Verizon 35k 1x data Subscribers DoCoMo 136k Foma Subscribers Telesp / Telerj 35k 1x data Subscribers KTF / SKT / LG 7.5M 1x data Subscribers Smartcom 1x launched KDDI 805k 1x data Subscribers 2.5M+ GPRS Subscribers 16.7M+ 1xRTT Subscribers 47 MMS networks launched Stats as of 2Q02

  14. 2006EGlobalTechnologyMix North America 18% of market Developing Asia 22% of market EMEA 39% of market CALA 5% of market Developed Asia 15% of market Wireless Investment:2006 Black represents “other”

  15. Nortel Networks and Wireless 2002 Q3 YTDRevenueMix 2002 Contracts • China Unicom (4 - China) • Microcell (Canada) • Ufone (Pakistan) • Cingular (USA) • Telefonica (Spain) • TSTT (Trinidad) • ACS (USA) • O2 (Pan-Europe) • Dutchtone (Netherlands) • Pelephone (Israel) • T-Mobile (Pan-Europe) • Alltel (USA) • C&W (CALA) • Ratelindo (Indonesia) • US Cellular (USA) • Triton PCS (USA) • Edge Wireless (USA) • Bellsouth Int’l (Ecuador) • China Mobile (2 - China) • Telgua (Guatemala) • Dobson (USA) • Centertel (Poland) • Smartcom PCS (Chile) • Aycell (Turkey) • Chunghwa (Taiwan) • Deutsche Bahn (Germany) • Vesper (Brazil) • Stable Revenues from • Global Diversity • Multiple Product lines • Services & Support

  16. Overtaking the Incumbents Top 6 Western Europe Operators 2G Network Presence 3G Network Presence Totals >100% due to multi-vendor networks Nortel Networks is the only vendor to increase presence as advanced networks are deployed Top 6 WE Operators account for >75% of Subscribers Vodafone - mmO2 - DT - Orange (FT) - TIM - Telefonica Source: Nortel Networks Q3/02 Includes Industry Estimated Contract Values

  17. Nortel Networks Wireless Presence Bouygues Telecom BellMobility T-Mobile Telus Verizon O2 ChinaUnicom Vodafone AT&TWireless Telefonica Sprint PCS ChinaMobile Orange VoiceStream ChungHwa Cingular Nextel Telstra Anticipating gains as Wireless Data Networks continue to roll out Capitalizing on global diversity, and multi-technology portfolio Winning new business with Optical & Multi-service market leadership Demonstrated end-to-end IP expertise

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