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Press Release

Zhone’s zNIDs and MXK FTTx Platforms Selected by the City of Salisbury for Municipal Fiber Project

Salisbury Seeds Community Cohesion and Economic Growth through Advanced Communications Services

Oakland, CA — January 27, 2010 — Zhone Technologies, Inc. (NASDAQ: ZHNE), a global leader in network access solutions, today announced The City of Salisbury in North Carolina has selected Zhone’s MXK and zNID Fiber to the Home (FTTH) solutions to serve as the bedrock platforms for a visionary municipal broadband initiative now underway. Salisbury officials cite interactive HDTV, telemedicine, advanced emergency services and greater community cohesion as potential differentiators in attracting knowledge workers and seeding new business growth in the shifting digital economy.

Leveraging fundamental design advancements in non-blocking architecture, Zhone’s MXK platform and zNID Optical Network Terminals (ONTs) are optimized to support unicast media streams that require vast amounts of dedicated bandwidth for applications like interactive HD video and telemedicine. For Salisbury, Zhone’s integrated approach to FTTH results in lowered equipment costs, increased network control, and targeted service differentiation on the full range of FTTx services.

“We don’t want to rely on the technology or timeline of existing carriers to meet our goals for a communications network that gives us a competitive advantage in attracting new businesses to our city,” said Mike Crowell, director of broadband services for Salisbury. “Zhone’s FTTx system proved to be the most powerful solution with twice the capacity over other platforms on the market. That nets out to significantly lowered bandwidth costs, while giving us the freedom to grow network services as we grow our city.”

Salisbury officials conducted an exhaustive feasibility study, including case studies, user satisfaction surveys and a thorough business case analysis before commencement of the project. Precedence showed a dramatic increase in service adoption when customers had the choice of municipally owned broadband service, surveyors said.

About Zhone Technologies

Zhone Technologies is a worldwide leading supplier of communications network equipment for telephone companies and cable operators. Zhone is enabling enhanced services by allowing network operators to offer broadband services over their existing networks today while simultaneously retooling for packet-based VoIP and IPTV over both copper and fiber access lines.

By utilizing Ethernet and IP technology, Zhone's products simplify network operations by consolidating multiple services onto a single access line. This convergence of services and networks simplifies provisioning and operations, delivers quality and reliability, and opens the door for delivering exciting new services.

Zhone pioneered this new category of products now commonly referred to as Broadband Loop Carriers (BLCs) which are regarded among the fastest growing segments of the multi-billion dollar DSL market. According to industry analysts, Zhone is first in broadband loop carrier market share. Zhone is also first in Ethernet over bonded copper market share and Zhone's products were awarded top ranking among BLCs.

With corporate headquarters in Oakland, California, Zhone operates development centers across North America and has sales and service facilities and customers spanning the globe. With deployments at over 600 carriers including some of the world's largest networks, Zhone has enabled carriers to reinvent their businesses.

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