Press Release

Oakland, CA — January 4, 2011 — Zhone Technologies, Inc. (NASDAQ: ZHNE), a global pioneer in FTTx network access solutions, today announced that it has expanded its relationship with Hardy Telecommunications, Inc. to include a new broadband-stimulus funded project that, in cooperation with Zhone’s partner Goldfield Telecom, will provide both fiber and copper connectivity to the underserved rural mountain communities of Hardy County, West Virginia.

Starting in early 2011, the community-owned telecommunications cooperative will use Zhone’s MXK™ intelligent Gigabit Passive Optical Network (GPON) solution and Zhone network interface device (zNID) optical network terminals (ONT) to deliver affordable and reliable ultrahigh speed Internet access, VoIP and video services as part of the Hardy OneNet Fiber to the Home project. The entire project will be funded by the $34.8 million in broadband stimulus grants secured during the first and second rounds of American Recovery and Reinvestment Act (ARRA) disbursements.

“Given the significant business growth we’ve experienced since first partnering with Zhone in 2009, they were a natural fit to consider for the access needs of our new broadband stimulus project,” noted Scott Sherman, general manager of Hardy Telecommunications. “After extensive evaluation, we realized that Zhone’s MXK platform best met our requirements for a high capacity backplane and delivered the switching capacity necessary to meet the high bandwidth capabilities and service quality we have set for the Hardy FTTH network.”

Zhone has leveraged deep experience in managing the complexity of multi-service access to build the industry’s most comprehensive portfolio of FTTx solutions and the MXK in particular has been well-tuned to Hardy’s specific field requirements to provide optimum cost efficiency and maximum service differentiation in combination with the zNID GPON ONTs.

Both Hardy and its subscribers benefit from the extensive system capabilities of Zhone’s MXK platform, including utilization of up to one gigabit capacity in the home and the ability to support the extreme bandwidth demands generated by multiple high-definition television (HDTV) screens, high definition digital video recorder (HD-DVR) content and video streaming within the home. The future-proof design of the MXK minimizes customer impact and installation time during the rollout of both current services and new advanced services that may be added in the coming years.

“Ideal for the fiber architecture and service models of Hardy, Zhone’s high-capacity and industry-leading MXK system is once again taking a central role in an important North American deployment,” explained Brian Caskey, chief marketing officer for Zhone. “The broadband stimulus initiative has given rural communities access to what may have been an otherwise unattainable next-generation broadband solution. As America sets its sights on bridging the technology and broadband divide, Zhone is helping build the advanced communications and entertainment network of the future in regions with limited connectivity to date. Zhone is pleased that its U.S.-manufactured broadband solutions have proven to be core contributors to the enablement of advanced services across the country.”

Zhone has deployed over 750 of its fully redundant, carrier-grade all-IP MXK platforms with more than 100 service providers globally. Featuring industry-leading density, scalability and switching capacity, the MXK is the industry’s first terabit access concentrator and provides non-blocking capacity of up to 3,600 100 Mbps GPON subscribers or 360 1G Active Ethernet subscribers.

Press Release

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