Press Release

Taylor Telephone Cooperative Selects Zhone's ZNID HPNA Standard Gateway to Deliver Voice and DSL Services with No New Wiring

Zhone's ZNID Intelligent FTTH Gateway Perferred by Field Technicians for Easy Installation of Premium Tiered Services

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Oakland, CA — August 29, 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 Taylor Telephone Cooperative has chosen Zhone's zNID intelligent residential gateway for all future smart home upgrades. Taylor Telephone began an initial roll-out of Zhone's zNID-GPON system in June of this year.

(Editor's Note: Please see Zhone release dated June 12, 2007: Zhone Sees Immediate Demand for New Intelligent Network Gateway and ITU G.984 GPON Multi-Service Platform http://www.zhone.com/about/news/2007/GPON-demand.en-us)

Citing dramatically reduced installation time, in addition to superior customer Quality of Experience (QoE), Taylor Telephone announced that Zhone's zNID will be the premier platform for the company's fiber to the home (FTTH) initiative delivering voice and multi-megabit DSL service.

Zhone's implementation of the ITU standardized HomePNA technology uses dual HomePNA chips to enable simultaneous operation over standard phone line and/or regular coax cable, nearly doubling the home network's bandwidth capacity. Zhone's HPNA standard zNID, radically reduces installation times. Since coax cable and phone line are pre-wired in most homes, technicians avoid the time and risk of drilling, crimping and running new cable.

"Overall ease of use and installation has made the zNID extremely popular with our field technicians who would rather not crawl under a customer's house or climb into an attic to run cable," said Bill Whisenhunt, plant manger for Taylor Telephone Cooperative. "We save in truck roll and installation costs, and just as importantly, we avoid the disruption and anxiety that drilling and cabling poses to our customers."

"In addition to reducing complexity and installation times, Zhone's implementation of HomePNA provides numerous other benefits, including greater capacity, a high degree of network visibility and control, and remote management and diagnostics," said Rich Nesin, president of HomePNA. "Using existing wiring also enables coverage throughout the entire home via intuitive coax and telephone jacks that are readily familiar to the end customer."

Zhone's zNID is the only residential gateway to provide Layer 3 network intelligence for prioritization of premium service tiers. The zNID is also the only gateway to derive its power from existing phone lines in the home, further reducing complexity and the need for adjunct equipment. Since zNID is managed via a standard TR-069 DSL configuration server, Taylor Telephone can handle upgrades and changes of advanced FTTH services as seamlessly as DSL. zNID's resilient thermal enclosure mounts on the outside of the house with a separate fiber tray so the electronic panel can be added upon service activation. zNID's Remote Broadband Access (RBA) allows the end-user anywhere-connectivity to their home network via a password protected virtual private network that can be accessed by mobile phone or remote Web browser.

"Zhone's zNID was designed to reduce installation times while enhancing quality of service and the ease of use experience for our customers and the end consumer," said Michael Fischer, vice president of North American sales for Zhone. "The end result means faster service roll-out of FTTH services which is a critical competitive advantage for our carrier and service provider customers."

Related Information

About Taylor Telephone Cooperative, Inc.

Taylor Telephone Cooperative, Inc., has more than a half century of service and provides voice and ultra high-speed DSL to customers across 14 Texas cities and nine counties.

About HomePNA

HomePNA is an incorporated, non-profit association of industry-leading companies working together to promote adoption of networking industry standards using existing home wiring. Members of HomePNA develop industry standards over both phone line and coaxial cables with the intent to rapidly bring to market a range of interoperable data and audio/video home networking solutions.

Founded in June 1998, HomePNA members represent cutting-edge international companies that span the networking, telecommunications, hardware, software and consumer electronics industries. For more information on HomePNA, visit
www.homepna.org.

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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