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Zhone Extends Market Leadership in BLC and Metro Ethernet Markets

Oakland, CA - September 7, 2005 [Press Release]  — Zhone Technologies, Inc. (Nasdaq: ZHNE), the first company dedicated to building total-delivery solutions for voice, data and video content services worldwide, today announced that it has reached several milestones for its Broadband Loop Carrier (BLC) equipment. This includes the shipment of over 700,000 BLC ports of video-capable ADSL2+, and over 275,000 ADSL2+ DSL modems. This milestone is a clear indicator of the company's number one position as the leading provider of ADSL2+ triple play BLC equipment.

"With it's combined product portfolio, Zhone shipped 62% of all BLC platform DSL ports during the most recent quarter and was the only BLC vendor shipping product into every geographic region," said Teresa Mastrangelo of BroadbandTrends.com Research. "The BLC category is part of the fast growing segment of DSL access platforms addressing the migration to Ethernet. DSL access platforms will represent over $4 billion in capital expenditures per year over the next several years. These platforms are increasingly critical in carrier networks because they allow for cost-effective delivery of advanced new triple-play services, including VoIP and IPTV over copper or fiber."

Another new market in which Zhone has been recognized for its rapid leadership is in the fast growing Ethernet over Copper market with it's Network Extender Ethernet Access Device (EAD) product line. Network Extenders deliver high speed Ethernet connectivity over existing copper wires, including bonded SHDSL and bonded T1/E1 solutions.

"Zhone is currently one of the top three vendors in the Ethernet over copper sector of the Ethernet WAN market for Ethernet Access Devices (EADs), a market we expect to show high growth over the coming years," said Michael Howard, Principal Analyst, Infonetics Research. "We are including market size figures for the new segment of EADs as part of our Metro Ethernet Equipment report in September 2005, and we expect Zhone to be a significant portion of the bonded copper market."

Zhone's combined access solutions are available in a range of chassis sizes and port counts supporting from 2880 ports in a single cabinet to 24 ports in a remote 1U DSLAM. Optional weather hardened outside plant enclosures and line powered capabilities allow service to be delivered across a carrier's entire serving area. Zhone has consistently maintained a place among the top broadband equipment vendors with ADSL2+. Zhone's early success in the fast growing Ethernet over copper market is now also being validated with its Network Extender T1/E1 and SHDSL EADs.

"Zhone continues to meet key milestones in its targeted segments of the broadband market," stated David Markowitz, vice president on marketing at Zhone Technologies. "Achieving these milestones reinforces our expectations of continued strength for the company because it represents early leadership in some of the fastest growing segments of the telecommunications industry."

Zhone's MALC and Raptor products provide the highest density and lowest cost per port of any BLC or DSL platforms on the market, and are the only family of access products that offers software upgradeability to a fully functional voice and data NGDLC, with in-service software-selectable TDM, ATM or IP uplinks. Zhone's recently acquired 12000, 8800 and 4200 products extend the product portfolio with the broadest range of BLCs and DSLAMs of any vendor.

Zhone's Network Extender products provide point-to-point Ethernet connectivity over the WAN. Network Extenders transport Ethernet directly over SHDSL, T1 or E1 -- making it easy to interconnect LANs over virtually any distance. For higher bandwidth requirements, multiple circuits may be bonded together to form higher-capacity Ethernet WAN connections.

About Zhone Technologies
Zhone designs and manufactures network equipment for network operators worldwide. Zhone's products allow network operators to deliver a rich array of voice, data, video, and entertainment services over their existing networks while simultaneously retooling for converged packet-based voice (VoIP) and video (IPTV) over copper or fiber access lines. Zhone's advanced networking solutions include the Single Line Multi-Service architecture (SLMS(TM)), Multi-Access Line Concentrator (MALC(TM)), Raptor(TM) and GrandSLAM ATM/IP DSLAMs, Ethernet in the First Mile bonded solutions, Zhone Residential Gateways (ZRG(TM)), GigaMux(TM) Optical Transport Systems and Zhone Management System (ZMS(TM)). With deployments at over 400 carriers including among some of the world's largest networks, Zhone has enabled network operators to reinvent their businesses. For more information, please visit www.zhone.com.

Contacts:
Investors
Tel: +1 510-777-7013
Fax: +1 510-777-7001
Email: investor-relations@zhone.com

Media
Jessica Mullens
Tel : +1 510-777-7020
Fax : +1 510-777-7001
Email: jmullens@zhone.com

Zhone, the Zhone logo, and all Zhone product names are trademarks of Zhone Technologies, Inc. Other brand and product names are trademarks of their respective holders. Specifications, products, and/or product names are all subject to change without notice. Copyright ©2005 Zhone Technologies, Inc. All rights reserved.

Forward-Looking Statements
This press release contains forward-looking statements that are entitled to the protection of the safe harbors contained in Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements include, among others, statements that refer to anticipated growth and trends in our business or key markets, including growth in the Ethernet market, improvements in the capital spending environment, anticipated performance of products or services, and other characterizations of future events or circumstances. Readers are cautioned that actual results could differ materially from those expressed in or contemplated by the forward-looking statements. Factors that could cause actual results to differ include, but are not limited to, the acceptance of new telecommunications services based on DSL technology, the economic slowdown in the telecommunications industry that has restricted the ability of our customers to purchase our products, commercial acceptance of our SLMS products, the development of new products and enhancements to existing products, defects or other performance problems in our products, and intense competition in the communications equipment market. In addition, please refer to the risk factors contained in Zhone's SEC filings available at www.sec.gov, including without limitation, Zhone's annual report on Form 10-K for the year ended December 31, 2004 and Zhone's quarterly reports on Form 10-Q for the quarters ended March 31, 2005 and June 30, 2005. Readers are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date on which they are made. Zhone undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.


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