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Zhone Introduces Industry's Most Comprehensive EFM and Ethernet Over Copper Product Portfolio

Zhone Technologies New IEEE EFM Platforms Win Deal For World's Largest EFM Carrier Network

Oakland, CA — October 9, 2007 — Zhone Technologies, Inc. (NASDAQ: ZHNE), a global provider of advanced communications equipment and a leader in VoIP, IPTV, and Ethernet over copper and fiber access lines, today announced that it has added key new platforms to its IEEE standard EFM and Ethernet over Copper (EoC) product family. Zhone's new platform announcement accompanies a key carrier win. Saudi Telecom Company (TASI: STC) has selected Zhone as the premier platform provider for the largest EFM network build of its kind. Editor's Note: Please see today's Zhone release: SAUDI TELECOM LAUNCHES WORLD'S LARGEST EFM NETWORK WITH ZHONE). The STC win will grow Zhone's EFM/EoC installed base to over 150,000 lines worldwide, making it the market leader in bonded copper systems.

"Zhone's EFM loop bonding portfolio is one of the broadest and deepest in the industry, offering solutions for a wide variety of applications," said Teresa Mastrangelo, principal analyst for Broadbandtrends.com. "Zhone's expanded EFM offering accompanied by a major customer win, contributes significantly to the evolution and industry traction of EFM over copper technology."

Addressing the SMB Fiber Divide

In the United States, less than three percent of businesses under 50 employees are fiber-fed and less than 14 percent of all businesses worldwide. While operators are working to increase the penetration of fiber to the premise, build-outs are taking time. Meanwhile bandwidth-hungry business applications such as unified communications, video conferencing, and data center consolidation are straining existing access options. By using standards-based EFM technology, voice-grade copper pairs can be quickly transformed from a kilobit, to a multi megabit transport medium. It's this fiber-like capacity, combined with simple and efficient provisioning and the ubiquity of entrenched copper that make EFM loop bonding one of the highest growth technologies in telecommunications today.

EFM market revenues are slated to grow more than 55 percent CAGR between 2005 through 2010 according to figures to be released by the market research firm, Vertical Systems Group. Published reports by the same group show the migration from legacy frame relay services to sub- 10 Mbps Ethernet represents an $8 billion dollar EoC market opportunity in the US alone. Zhone's Ethernet loop bonded platforms are a highly cost effective and rapid means of addressing the wide range of EFM applications requiring 10 to 45 Mbps.

Zhone Delivers Industry's Most Comprehensive EFM/EoC Product Portfolio

Zhone is introducing three new EFM/EoC SHDSL.bis line cards for its flagship MALC ™ multi-service access platform (MSAP). Zhone's MALC is the first MSAP to support the full range of Ethernet over Copper aggregation technologies and leads the industry in port density. Advanced layer intelligence includes auto discovery and traffic prioritization enabling symmetrical provisioning of quality sensitive services like multi-conference video or municipal traffic and security monitoring.

In addition to new high-density EFM line cards, Zhone has also introduced its latest series of EtherXtend™ Ethernet Access Devices. Installed at the customer premise, Zhone's EtherXtend equipment comes in one, two and four port models for immediate provisioning of up to 22.4 Mbps symmetrical bandwidth. Zhone's EADs come preconfigured for plug and play simplicity and include key software enhancements that help service providers speed deployment of high quality, high revenue producing Ethernet offerings including Transparent LAN services. Among the features supported are IP SLA, (service level agreement) which enables operators to provide guaranteed levels of service and performance. Features include Zhone's Multimedia Traffic Management (MTM™), rate shaping in addition to tiered provisioning capabilities.

"Zhone has created a broad system suite that gives carriers a simple and profitable means to address the service gap that exists below 45 Mbps," said Eric Presworsky, chief technology officer for Zhone. "With more than 150 thousand installed EoC ports worldwide, we're pleased to provide our customers with the most time tested and field proven loop bonding technology in the industry."

About Zhone Technologies — Access for a Converging World

Zhone Technologies, Inc. (NASDAQ: ZHNE) is a provider of advanced communications equipment to more than 600 operators worldwide. The company's broad line of access and transport networking solutions enables the full range of multi-play services, including residential and business broadband, VoIP, IPTV, and Ethernet. Zhone's converged access platform improves network agility and reduces costs, allowing operators to rapidly deploy premium services on their existing copper and fiber infrastructure while providing a seamless migration path to an efficient, all-IP network. www.zhone.com

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Forward-Looking Statements
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