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Zhone's Market Leading MSAP Selected by ON Telecoms for Aggressive EFM Initiative

On Telecoms to Deliver Premium EFM Services Providing Corporate Customers a High Value Alternative to Expensive Leased Lines

Oakland, CA — May 19, 2008 — Zhone Technologies, Inc. (NASDAQ: ZHNE), a global leader in multi-service access equipment for VoIP, IPTV and Ethernet over copper and fiber access lines, today announced that ON Telecom's has selected Zhone's MALC™ multi-service access platform (MSAP) to deliver premium EFM (Ethernet in the first mile) business services throughout the Attica region in Greece. ON Telecoms will deploy Zhone's MALC paired with EtherXtend™ subscriber site equipment in tandem with the Zhone Management System (ZMS) for guaranteed end-to-end performance with enforced IP service level agreements (SLAs).

ON Telecoms selected Zhone's EFM solution to support a company-wide initiative to win high-end business customers away from expensive leased line service, historically the only option in the region for corporate customers requiring premium service guarantees.

"Today medium-to-top businesses in Greece rely mainly on leased line circuits which are extremely expensive. This has created pent up demand for a competitive alternative for businesses requiring reliable, high performance connections," said, Karolos Gikas, On Telecoms' CEO. "Zhone's end-to-end EFM platforms enable ON Telecoms to introduce a real and competitive alternative for businesses requiring state-of-the-art communications with premium service guarantees."

After trialing platforms from other leading EFM vendors, ON Telecoms selected Zhone to support the expansion of its business service portfolio to discerning corporate customers who typically require symmetric point-to-point or point-to-multipoint connections, high symmetric internet feeds and multi-primary rate interface (PRI) telephony service. ON Telecoms cited superior scalability and carrier grade platform redundancy as key decision factors.

Zhone's standards-based SHDSL.bis EFM platforms enable ON Telecoms to deliver 40 Mbps symmetric services with guaranteed SLAs and quality of service guarantees. ON Telecoms EFM initiative is matched by the company's elite customer support policy, aiming for the highest level of the market. Founded just 18 months ago, ON Telecoms has already won 70,000 customers and has built a fiber optic network to reach 300,000 business customers and 1,350,000 households.

"Zhone is proud to provide ON Telecoms industry-leading platforms to ensure a high degree of market agility while ensuring delivery of up-to-the-minute communications services today and into the future," said Cesare Sironi, GM of global strategy for Zhone. "The introduction of EFM and the new generation of services, reinforce ON Telecoms presence as a reliable and solid business-to-business telecom player in the Greek market."

About ON Telecoms

ON Telecoms is a leading alternative operator in Greece. After only 18 months of operation, ON Telecoms has gained a reputation for exemplary service and innovation. Today ON Telecoms' proprietary next generation network covers the wider area of Attica, with more than 220 Km of fiber optic, passing 1,350,000 households and 300,000 business units. ON Telecoms offers a unique service portfolio, based on ADSL2+ access, that combines voice, fast internet and TV services, responding to both residential and small business. Today more than 70,000 customers benefit from ON Telecom's unique offering. www.ontelecoms.com

About Zhone Technologies -- Access for a Converging World

Zhone Technologies, Inc. (NASDAQ: ZHNE) is a provider of advanced access network equipment to more than 600 operators worldwide. The company offers the industry's broadest portfolio of fully-integrated access solutions, enabling the full range of multi-play services, including residential and business broadband, VoIP, IPTV, and Ethernet. Zhone's converged multi-service 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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