Press Release

Zhone Technologies Selected by On Telecoms Greece for State-of-the-Art Optical Network

Zhone WDM Optical Transport Equipment Chosen to Extend Fiber Capacity and Increase Reliability for Pure Packet Network

Oakland, CA — July 31, 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 On Telecoms Greece has selected Zhone's WDM optical transport gear to extend the capacity and reliability of its state-of-the-art IP network. On Telecoms Greece--the second largest carrier in the region—is one of the first operators to deploy a pure-packet, all-fiber network. This approach greatly increases network efficiencies, enabling On Telecoms to offer highly competitive, bundled triple-play while eliminating bottlenecks to its serving area, a region that extends to 80 percent of the businesses and residences in the Attica province.

"We've designed our network to ensure maximum capacity and reliability," said Sandro Falleni, general manager of technology for On Telecoms Greece. "Zhone provides the most robust transport suite in its class, accompanied by the scalability, feature breadth and the high value we require."

On Telecoms provides telephony, ultra high speed Internet, and a range of new video services to businesses and residential customers as well as other telecom carriers via the European Union's Unbundled Local Loop (ULL) initiative. On Telecoms' service vision is to lead the digital revolution by creating an easier, more exciting Internet experience for its customers.

"By selecting Zhone's GigaMux optical transport suite, On Telecoms ensures secure, scaleable C/DWDM transport capacity with simplified management requirements," said Mike Scheck, Zhone's vice president of international sales. "We're proud to be a part of the On Telecoms network. Their business is a superb model of the pure-IP network vision, offering some of the most advanced digital services available today."

About On Telecoms Greece

ON Telecoms is a new Generation Telecommunication company, which started its commercial operation last January. It is an owner of the General Telecommunication License and is developing its own fiber network in the greater Attica area in the initial phase. ON Telecoms is fully owned by ON Network Holdings N.V., a holding company based in Holland. The main shareholders of the company are the ARGO Capital Partners Fund Ltd and its management team. www.ontelecoms.com

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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