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Zhone's Award-Winning SkyZhone Metro Wi-Fi System Now Eligible for Rural Utilities Service Funding

Telco-Grade Reliability Gives Service Providers Renewed Opportunity for Public Wi-Fi Projects

Oakland, CA — July 7, 2009 — Zhone Technologies, Inc. (NASDAQ: ZHNE), a global leader in network access solutions, announced today that its SkyZhone telco-grade Wi-Fi system is the latest Zhone product to be accepted by the US Department of Agriculture's, Rural Utilities Service (RUS) for use by RUS program participants. RUS provides grants and low cost loans to help network operators secure authorized equipment to bring universal broadband services to rural and underserved communities. RUS and the National Telecommunications and Information Agency (NTIA) will disperse the $7.2 billion in economic stimulus funding allocated for broadband initiatives under the 2009 American Recovery and Reinvestment Act (ARRA).

Awarded for technology innovation, SkyZhone's breakthrough design greatly enhances both the performance and economics of Wi-Fi, giving network operators renewed opportunities for service delivery. SkyZhone is the only Wi-Fi system to provide integrated DSL backhaul and line powering, combined with an 802.11n, all-MIMO antenna architecture. This means, network operators can leverage existing backhaul facilities to deliver high capacity Wi-Fi services with greater flexibility in radio placement. Engineered for public safely applications, SkyZhone provides telco-grade uptime and ongoing operation even during extended AC power outages.

Rural telecom provider, Manti Tele Communications Company (MTCC) recently deployed the SkyZhone Wi-Fi system to support a number of public-service and commercial applications in Manti, Utah.

"We first attempted to provide municipal wireless services with a mesh Wi-Fi system from another vendor, but the installation was problematic and we had a challenge getting the complex radio network to work well," said Dallas Cox, Director of Support and Advertising for Manti Tele Communications Company (MTCC) "Installation and turn-up of the SkyZhone system was smooth and the coverage, capacity and performance are outstanding."

"SkyZhone provides RUS participants an ideal opportunity to deliver on the vision of reliable public Wi-Fi access," said Steven Glapa, VP of product marketing and management for Zhone. "Integrating Wi-Fi seamlessly into telco networks, using existing network assets vastly improves the economics, performance and viability of Wi-Fi, making it an attractive win for network operators."

"Zhone's engineering design effectively addresses the reliability and coverage issues associated with earlier Wi-Fi systems," said Richard Webb, Directing Analyst, WiMAX, WiFi, and Mobile Devices for Infonetics Research. "SkyZhone is tailor made for US service providers in a position to benefit from RUS programs for universal services."

Zhone products first gained RUS acceptance in 2003, with SkyZhone being the newest addition to the program. For more information about SkyZhone, or to ask about the RUS program please visit http://www.zhone.com/products/SkyZhone/ or call (877) Zhone-20 (946-6320).

About Zhone Technologies -- Access for a Converging World

Zhone Technologies, Inc. (NASDAQ: ZHNE) is a global leader in multi-service access solutions, serving more than 700 of the world's most innovative network operators. The company offers the industry's only fully-integrated portfolio of MSAP, FTTx, EFM and Wi-Fi access technologies, improving network agility and reducing the costs of delivering the full spectrum of access services, including residential and business broadband, VoIP, and High-Definition IPTV -- over copper, fiber, and wireless. Zhone is headquartered in California, and its MSAP products are all manufactured in the USA, in a facility that is emission, waste-water, and CFC free.

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