Bay Phones Telephone Company Selects Zhone's MALC and Network Telco's ISS 6000 Softswitch Solution; Next-Generation Access Architecture Offers Cost-Effective Voice Over IP and High Speed Data Service Delivery.

OAKLAND, Calif. & HOUSTON -- Zhone Technologies, Inc. (Nasdaq:ZHNE), the first company dedicated to building total-delivery solutions for voice, data and video content services worldwide, and Network Telco, a leading provider of advanced, highly reliable switching platforms, announced today that Bay Phones, Ltd., a leading telephone operator based in Bangladesh has selected Zhone's Multi-Access Line Concentrator (MALC(TM)) Next-Generation Packet Loop Carrier and Network Telco's ISS 6000 Softswitch to deliver voice and data service throughout their serving area.

As a key part of Bay Phone's network, the MALC is deployed using V5.2 signaling to the ISS 6000 Softswitch from Network Telco. The first phase of the deployment is delivering service to 5,000 subscribers. The total project is expected to extend to 50,000 subscribers and will include support for both wireless local loop and VoIP equipment. Network Telco is also providing the billing, customer service, voice mail, and prepaid systems.

Network Telco's ISS 6000 Softswitch solution is a complete TDM and IP switching solution that supports multiple VoIP and TDM protocols. The Network Telco Softswitch supports SIP, H.323, MGCP, SS7, V 5.2, and GR-303 as well as other IP and TDM protocols.

As part of Zhone's Single Line Multi-Service (SLMS(TM)) architecture, the MALC allows telephone carriers to deliver the triple play of voice, data and video services to their subscribers over a single network. SLMS has proven cost effective for carriers worldwide and encompasses any deployment scenario, whether greenfield networks, migration from old copper plant or an overlay.

"With the Network Telco Softswitch, service providers can provide the latest VoIP services regardless of the protocol required, and meet any legacy telephony requirements such as V5.2 or GR-303," said Bob Pinckney, president of Network Telco.

Zhone's MALC and Network Telco's ISS 6000 Softswitch allow Bay Phones to elegantly migrate from circuit to packet based services", said Abul Hashem, Executive Director of Westec, Ltd., parent company of Bay Phones. "The result is lower deployment costs while enhancing our subscriber's experience."

Bay Phones is also using Zhone's Management System (ZMS) -- a common flow-through provisioning and management platform that integrates into existing OSS systems. Zhone's ZMS management system has been OSMINE certified.

With approximately 1,000,000 fixed telephone lines installed, Bangladesh's teledensity is still the lowest in South Asia, according to statistics of the International Telecommunication Union (ITU). Only 1.56 of 100 inhabitants have telecoms access, according to 2003 UN telecoms data.

About Bay Phones Telephone Company (Bay Phones)

Bay Phones is a subsidiary of Westec, Ltd., a telephone and internet service provider in Bangladesh. Bay Phones is one of the first competitive local exchange carriers in the country of Bangladesh and is offering voice and data services to residential and business customers in Bangladesh's second largest city of Chittagong.

About Network Telco

Based in Houston, Texas, and with an office in Tokyo, Japan, privately held Network Telco is the technology leader in next generation switching solutions. During six years of profitable growth in a challenging telecom environment, Network Telco has expanded its customer base and product offerings to become a leader in providing unique solutions for carriers worldwide.

Network Telco switches are deployed in tandem VoIP networks, as local service Class 5 switches providing V 5.2 and GR-303 signaling, as internet offload switches for ISPs, and as enhanced services platforms for Prepaid, Voice Mail, One Number Follow-Me and other enhanced Tandem services.

With support for SIP, MGCP, IPDC, H.323, Megaco, and NCS all available, Network Telco has the broadest suite of applications on any one platform spanning the entire spectrum of VoIP and Circuit Switched solutions. For more information please see www.networktelco.com.

About Zhone Technologies, Inc. (Zhone)

Zhone (Nasdaq:ZHNE) 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) ATM/IP DSLAMs, Zhone Residential Gateways (ZRG(TM)), GigaMux(TM) Optical Transport Systems and Zhone Management System (ZMS(TM)). With deployments at over 300 carriers including among some of the world's largest networks, Zhone has enabled network operators to reinvent their businesses. For more information, please visit http://www.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 (C) 2005 Zhone Technologies, Inc. All rights reserved.