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Zhone Announces Higher Capacity First-Mile Ethernet Solution

EtherXtend(TM) Delivers Cost-Effective, High-Bandwidth Over Existing Copper Loops

Oakland, CA -- April 25, 2006 -Zhone Technologies, Inc.(Nasdaq: ZHNE), the market leader in Broadband Loop Carrier platforms and the first company dedicated to building total-delivery solutions for voice, data and content services worldwide, today announced it's EtherXtend™ products to deliver cost-effective high bandwidth Ethernet services over existing copper loops.

Zhone's new EtherXtend CPE and EtherXtend 319 and 719 chassis represent the most scalable line of Ethernet in the First Mile over Copper (EFM) solutions in the industry. Zhone's EtherXtend product family enables carriers to quickly deliver standards based Ethernet services over existing copper SHDSL or T1/E1 circuits to provide up to 5.7 Mbps per copper loop. Multiple circuits can be bonded to provide over 45 Mbps of Ethernet bandwidth to quickly satisfy growing subscriber service requirements. This copper-based solution provides a compellingly fast and inexpensive alternative to burying and dedicating fiber.

Despite an ever-growing need for bandwidth, only 11.7% of commercial buildings in the U.S. with 20 or more employees have access to fiber, according to Vertical Systems Group. With Zhone's extended rate Ethernet over Copper solutions, service providers can quickly offer a wide array of bandwidth-intensive services and applications while eliminating the expense and delays due to permitting, trenching and installing expensive fiber connections.

"Much of the EFM opportunity will come from service migration and replacement strategies," said Erin Dunne of Vertical Systems Group. "Service providers have an opportunity to close the gap between what customers need and what the industry currently offers via Ethernet over copper solutions that enable reach to virtually any customer location and allow flexible provisioning of sub-10 Mbps access rates.

Ventelo, a leading provider of Telephony, Mobile and Internet to enterprises and end users in the Nordic countries, has incorporated Zhone's EtherXtend to utilize existing copper facilities to deliver high bandwidth Ethernet services over existing copper loops to business customers. "Ventelo is offering business customers the shortest service interval and highest quality Ethernet experience in Norway," said Aage Blankvoll of Ventelo's Business Network Planning. "EtherXtend allows us to quickly and cost-effectively extend our service reach and to add new services that subscribers want."

Zhone's products have long been the market leader in the rapidly growing Ethernet over Copper market. Zhone's Ethernet over bonded copper solution was first to market, with products deployed since 1998. Analyst research firm Infonetics Research has affirmed Zhone's "Number 1" market share for total ports shipped in 2005. With hundreds of thousands of ports already in service, Zhone's Ethernet over bonded copper solution is field proven. And with this announcement, EtherXtend is now also available on Zhone's Multi-Access Line Concentrator (MALC) the world's Number 1 market leading Broadband Loop Carrier product.

"With growing demand for bandwidth-hungry Ethernet applications, service providers are looking to deliver high bandwidth Ethernet services over existing facilities," said David Markowitz, vice president of marketing for Zhone. "Zhone's EtherXtend products deliver Ethernet everywhere solutions for our service provider customers over the copper already deployed."

Zhone's EtherXtend products are both EFM standards compliant and compatible with Zhone's broad installed base of bonded copper solutions to deliver point-to-point Ethernet connectivity over the WAN. EtherXtend transports Ethernet directly over SHDSL, T1 or E1 - making it easy to interconnect LANs over virtually any distance. These transparent LAN services allow businesses with broadly distributed remote offices to operate as if located on the same local network. For higher bandwidth requirements, multiple circuits may be bonded together to form higher-capacity Ethernet WAN connections. Using the technology, service providers can offer a wide array of bandwidth-intensive services and applications.

Related Information

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.

About Ventelo
Ventelo is an independent telecommunications operator delivering a complete range of services with Telephony, Mobile and Internet to enterprises and end users in the Nordic countries. For more information, visit Ventelo on the Internet: http://www.ventelo.se

Contacts:

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

Media
Tel : +1 510-777-7020
Fax : +1 510-777-7001
Email: public-relations@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.

Forward-looking statements
This press release contains forward-looking statements that are subject to the safe harbors created under the Securities Act of 1933 and the Securities Exchange Act of 1934. Forward-looking statements include, among others, statements that refer to anticipated growth and trends in Zhone's business or key markets, including growth in the Ethernet market. 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, fluctuations in demand for network access products and general economic conditions as well as those specific to the communications, internet and related industries. 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, 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 for any reason.

Zhone's Single Line Multi-Service architecture (SLMS™), allows carriers to concurrently deliver voice, new premium data and video services over copper or fiber access lines.

©2006 Zhone Technologies. All Rights Reserved.


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