Press Release

Zhone Technologies Wins USDA Rural Utilities Service Acceptance to Help Providers Modernize Rural Telecom Networks for Universal Broadband

MALC GPON OLT and zNID ONT Eligible for RUS Funding to Bring FTTH to Rural Communities

Oakland, CA — January 20, 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 GPON Optical Line Terminal (OLT) and zNID Optical Network Terminals (ONTs) are now listed with the U.S. Department of Agriculture's, Rural Utilities Service (RUS). The RUS program provides economic incentives to help carriers secure authorized equipment to build or upgrade existing plant to bring high-speed broadband to rural and underserved communities. Zhone's MALC family of products first gained RUS acceptance in 2003 with the GPON system being the newest addition to the program.

The MALC OLT and zNID ONT GPON platforms were awarded RUS listing based on testimonials from rural customers using Zhone's system to provide fiber to the home (FTTH) services at up to 100 Mbps.

"Zhone equipment will enable us to provide the next generation of services to our subscribers," said Steve Singletary, assistant manager for Taylor Telephone Cooperative. "Based on the features and quality of Zhone platforms and the excellent level of support we received, we would not hesitate to recommend Zhone equipment."

The local exchanges involved with Taylor Telephone Cooperative's FTTH project were previously served by aerial copper and a cost analysis revealed that FTTH GPON could be as economical.

"The US has gone from leading internationally in broadband adoption and data rates to lagging significantly among developed countries," said Steven Glapa vice president of product management and marketing for Zhone. "It's extraordinary to watch rural communities go from century-old communications infrastructures to fiber connectivity at up to 100 Mbps, highlighting the economic potential unleashed through better broadband. The RUS program is a ready framework to disseminate the funds needed to modernize rural infrastructures and we're gratified to be a participating manufacturer."

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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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