Press Release

Zhone Technologies Secures First GPON Customer in Russia with Telecom TZ Deployment

MXK, zNIDs Will Deliver Higher Speeds, Better Network Performance to Moscow Businesses

Oakland, CA — December 15, 2010 — Zhone Technologies, Inc. (NASDAQ:ZHNE), a global pioneer in FTTx network access solutions, announced today that its industry-leading MXK™ multi-service access node (MSAN) system will serve as the core enabler of Telecom TZ's migration to Gigabit Passive Optical Network (GPON) solutions in Moscow, Russia. Through the channel partner Connect Plus, a combination of the MXK and Zhone Network Interface device (zNID) optical network terminals (ONT) will also be deployed to support approximately 5,000 enterprise customers across the service footprint.

Telecom TZ was previously leveraging a Broadband PON (BPON) solution to deliver voice, video and data services to its customers in the city. However, the Russian operator primarily serves enterprise customers and is experiencing an increased demand for faster speeds among its most bandwidth-intense business services – signaling the need for more flexibility and better performance capabilities across its more than 5,000 kilometers of fiber network.

"GPON significantly improves the triple-play experience for business customers," explained Brian Caskey, chief marketing officer at Zhone. "In fact, GPON's unique high-bandwidth capabilities will likely encourage operators – and give them the expanded resources – to launch future-focused, revenue-generating services that are coming into demand by the healthcare, energy, first responder and hospitality sectors, among others."

"Zhone's GPON solutions are giving us a high level of flexibility in both our service options and system configuration options that wasn't available with our existing BPON network," said Angelo Tozzi, president, Telecom TZ. "With our expanded bandwidth capacity, we are now able to more efficiently deliver the high-quality advanced services that will elevate our competitive position and accelerate our growth strategy in the coming months. Zhone's portfolio of zNID ONTs and the MXK help us extend our reach with our business customers."

Telecom TZ began integrating Zhone's MXK terabit access platform into its network in September 2010 after a two-month trial and expects the upgrade project to be complete in the second quarter of 2011. Zhone's MXK platform is a fully redundant, carrier-grade all-IP platform and the industry's first terabit access concentrator. It features industry-leading density, scalability and switching capacity and provides non-blocking capacity of up to 3,600 100 Mbps GPON subscribers or 360 1G Active Ethernet subscribers.

Telecom TZ will immediately benefit from the platform's streamlined network upkeep, output management and customer provisioning capabilities – which minimize the resources needed for support, maintenance and technical personnel training – and the MXK's ability to support for Active Ethernet and GPON on the same system enables Telecom TZ to configure its networks with maximum flexibility and efficiency.

Longer term, Zhone's future-proof MXK platform offers Telecom TZ multi-access points at highly efficient capacities and costs that will allow the operator to seamlessly and cost-effectively integrate additional broadband technologies such as 10G GPON as customer demand dictates.

For more information about Zhone's MXK or zNID solutions, please visit http://www.zhone.com

About Zhone Technologies

Zhone Technologies, Inc. (NASDAQ: ZHNE) is a global leader in all IP multi-service access solutions, serving more than 750 of the world's most innovative network operators.

The IP Zhone is the only solution that enables service providers to build the network of the future…today, supporting end-to-end Voice, Data, Entertainment Social Media, Business, Mobile Backhaul and Mobility service.

Zhone is committed to building the fastest and highest quality All IP Multi-Service solution for its customers.

Zhone is headquartered in California and its products are manufactured in the USA in a facility that is emission, waste-water and CFC free.

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