Grande Communications Selects Zhone's Ethernet Over Copper Solutions for Delivery of Voice and Data Services.

Product Suite Enables Complete Range of Services Over New Ethernet Services Using Existing Copper Loops

OAKLAND, Calif. -- Zhone Technologies, Inc. (NASDAQ:ZHNE), a global provider of advanced communications equipment and a leader in VoIP, IPTV, and Ethernet over both copper and fiber access lines, today announced that Grande Communications has selected and deployed Zhone's highly acclaimed EtherXtend product for Ethernet service delivery throughout its service areas.

Zhone's EtherXtend, Ethernet in the First Mile over Copper (EFM) solution provides a cost-effective and elegant method for service providers to offer scalable Ethernet-based access services to a large and growing base of business customers. These products deliver scalable Ethernet bandwidth over ordinary copper loops. By bonding pairs of copper, service providers can quickly deliver up to 45Mbps of manageable bandwidth. Grande has been deploying Zhone's MALC 723 and MALC 319 broadband loop carriers utilizing both ADSL 2+ and POTS circuits for the past three years.

According to Infonetics Research, Ethernet services are expected to generate more than $5 billion in service revenues by 2009 in the U.S. alone. However, fiber touches only 11 percent of the more than five million small and medium-sized business locations. IP-based voice, video and network-based content services provide new revenue opportunities for service providers. The ability to offer Ethernet-based access services is critical to service provider growth.

Zhone has a unique position in the Ethernet market with the only broadband loop carrier (BLC) that also supports EFM Ethernet access. With more than one million BLC ports deployed at carriers around the world, only Zhone provides a common platform that supports DSL, POTS and EFM. Only Zhone offers the density and the range of services that carriers require. Zhone offers the broadest range of platforms from large systems to a full line of smaller devices.

Ethernet is already ubiquitous within homes and businesses, but has not been made widely available as an access solution. The new 802.3ah standard recently ratified by the IEEE is accelerating the adoption of this compelling new solution. As an early leader in the space, Zhone is uniquely well positioned to capture this market. Only Zhone can claim:

* First to market with Ethernet over bonded copper products from Net to Net shipping since 1998

* Number 1 market leader in EFM over copper in 2005 according to analyst firm Infonetics

* Number 1 market-leading BLC

In just seven years to nearly 300,000 connections, Grande's Internet, phone and cable retail business continues to grow, and Zhone's Ethernet services architecture has improved and enhanced Grande's network capacity, subscriber provisioning and service delivery.

"Grande is committed to delivering superior service to our subscribers," said Lamar Horton, Director of Network Engineering at Grande. "The addition of Zhone's Ethernet access technology in combination with Grande's extensive copper and fiber network creates an unparalleled delivery vehicle, allowing us to rapidly deliver packet services that our subscribers require while lowering our cost structure."

The growing prominence of IP communications also led to Grande's selection of Zhone according to Robert Russell, Director of Sales Operations and Product Development at Grande. "Having the ability to provide our customers native Ethernet IP communications seamlessly across our fiber and copper networks was a critical factor in our Metro Ethernet vendor selection." He also adds, "The unique ability to offer true 802.1 Q-in-Q Transparent LAN Service with the requisite Layer 2 and 3 controls is an important component of this product offering for Grande."

"Zhone is developing products that address the real world problems facing service providers today. Namely, the build-out of a network infrastructure that can deliver broadband Ethernet solutions today, while providing the scalability to allow for additional applications and services of tomorrow," said Eric Knapp, senior product manager, Ethernet access products at Zhone. "Grande understands the importance of extending and building on to its existing infrastructure in order to capture this enormous market opportunity for delivering high value broadband services."

About Grande Communications (www.grandecom.com)

Headquartered in San Marcos, Grande Communications is building a deep-fiber broadband network to homes and businesses from the ground up. Grande delivers high-speed Internet, local and long-distance telephone, digital cable and wireless home security services over its own advanced network to communities in Texas. Grande's bundled service area includes portions of Austin, Corpus Christi, suburban northwest Dallas, Midland, Odessa, San Antonio, San Marcos and Waco. Grande also leverages its telephony and data infrastructure by serving enterprises and communications carriers nationwide with broadband transport services and network services.

About Zhone Technologies, Inc. (www.zhone.com)

Zhone Technologies, Inc. (NASDAQ:ZHNE) is a global provider of advanced communications equipment to more than 600 operators in both emerging and established markets. Zhone's market-leading Broadband Loop Carrier equipment enables operators to rapidly deploy revenue-generating access services using their existing infrastructure, while providing a migration path to a cost-efficient, all-IP access network. The company's products address a broad range of applications including residential and business broadband, VoIP, IPTV, and Ethernet over both copper and 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]).

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] 2006 Zhone Technologies, Inc. All rights reserved.