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Zhone's MSAP Selected for Pioneering Sale of Branded DSL and Voice Services through Fast-Growth Retail Chain -- La Curacao

Zhone's End-To-End Platform Leadership, Superior Interoperability and Exemplary Customer Service Cited in Selection Criteria

Oakland, CA — January 13, 2009 — Zhone Technologies, Inc. (NASDAQ: ZHNE), the global leader in single-platform delivery of voice, DSL, EFM, FTTx and wireless services, today announced that its MALC Multi-Service Access Platform (MSAP) was selected to support a pioneering sales model of branded voice and high-speed DSL through Curatel, a subsidiary of the La Curacao chain of retail department stores. Superior interoperability and multi-service platform leadership, coupled with Zhone's reliability and outstanding customer service were cited by Curatel as the winning decision factors.

"This is the first program of its kind and customer response to this service model is phenomenal," said Dan Margolis, Curatel's director. "The performance and interoperability of the MALC platform and subscriber site equipment -- coupled with the expert service we receive -- make us confident that Zhone is a company we can count on over the long term."

Headquartered in Southern California, La Curacao is among the top 100 electronics and appliance retailers in the US and is a highly trusted brand within the Latino community, the fastest growing demographic in the United States. La Curacao customers can now sign up for Curatel's phone and high-speed DSL service by itself, or packaged with computers from any of La Curacao's 10 large-format department stores. DSL access is available to Curatel customers in 1.5 Mbps and 4 Mbps service tiers. By using Zhone's customization program, Curatel's logo appears on all DSL modems, the software sleeve and CD, and the bi-lingual installation guide. As part of the customization program, Zhone also pre-configures the modems for Curatel's network, providing a plug and play experience for the end user.

"Curatel and La Curacao are providing services in an extremely user friendly sales model that enhances brand loyalty," said Steven Glapa, Zhone's vice president of marketing and product management. "Zhone's unique customization program and modem pre-configuration enable Curatel and La Curacao to fully leverage their brand strength and to ensure the best possible end-user experience."

About La Curacao, Curatel and Pasito.com

Established 1978, LA CURACAO is one of the largest and well-known companies serving the growing U.S. Latin community. Its retail division has department store locations in Los Angeles, Panorama City, South Gate, Huntington Park, Chino, Lynwood, Anaheim, Santa Ana, and San Bernardino, as well as Phoenix, Arizona. Other divisions of La Curacao include Internet services (Pasito.com), Telecom (Curatel), Travel agencies, Restaurants (Pollo Campero), Export Program, a Money Transfer company, and Financial services on retail purchases.

About Zhone Technologies -- Access for a Converging World

Zhone Technologies, Inc. (NASDAQ: ZHNE) is a global leader in multi-service access network solutions, serving more than 700 of the world's most innovative network operators. The company offers the industry's broadest fully-integrated portfolio of MSAP, FTTx, EFM and Wi-Fi access technologies, enabling a full suite of services, including residential and business broadband, VoIP, and High-Definition IPTV. Zhone's converged multi-service access platform helps operators rapidly deploy premium services using copper, fiber, and wireless while improving network agility and reducing costs. www.zhone.com

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