SecProbe.io

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Mail Stop 3561

      							December 28, 2005

Via U.S. Mail and Fax (510-777-7001)
Mr. Kirk Misaka
Chief Financial Officer
Zhone Technologies, Inc.
7001 Oakport Street
Oakland, CA 94621

	Re:	Zhone Technologies, Inc.
      Form 10-K for Fiscal Year Ended December 31, 2004
		Filed March 16, 2005

Dear Mr. Misaka:

      We have reviewed your filing and have the following
comments.
We have limited our review to only your financial statements and
related disclosures and do not intend to expand our review to
other
portions of your documents.  Where indicated, we think you should
revise your documents in response to these comments.  If you
disagree, we will consider your explanation as to why our comment
is
inapplicable or a revision is unnecessary.  Please be as detailed
as
necessary in your explanation.  In some of our comments, we may
ask
you to provide us with information so we may better understand
your
disclosure.  After reviewing this information, we may or may not
raise additional comments.

	Please understand that the purpose of our review process is
to
assist you in your compliance with the applicable disclosure
requirements and to enhance the overall disclosure in your filing.
We look forward to working with you in these respects.  We welcome
any questions you may have about our comments or on any other
aspect
of our review.  Feel free to call us at the telephone numbers
listed
at the end of this letter.

Form 10-K for the year ended December 31, 2004

Selected Financial Data, page 16

1. Comply with Item 301 of Regulation S-K and briefly describe, or
cross-reference to a discussion thereof, factors such as
accounting
changes, business combinations or disposition of business
operations
that materially affect the comparability of the information
reflected
in selected financial data.

Consolidated Statement of Operations, page 46

2. Revise your presentation to indicate the results for the year
ended December 31, 2002 have been restated.

Consolidated Statement of Cash Flows, page 49

3. Revise your presentation to reflect the changes on a gross
basis
as required by paragraph 11 of SFAS No. 95.

Note 1(d) Revenue Recognition, page 51

4. Please expand on your revenue recognition policy related to
distributors.  Tell us:
a. what constitutes sufficient customer sales and sales return
history to support revenue recognition upon shipment to a
distributor,
b. the details of the privileges to return a portion of inventory,
c. how you monitor your distributors to avoid inventory returns,
d. the percentage of revenue that has been recognized upon
shipment
to distributors,
e. the percentage of your international revenue through
distributors,
and
f. for each period presented your estimate of returns under the
privilege to return inventory and the actual returns.
		Also, tell us your consideration of SFAS No. 48 and SAB
Topic 13(b) with 			regards to your revenue recognition
policy for distributors.

Note 2 - Acquisitions, page 57

5. Tell us about the results of your tests for significant
subsidiaries and the requirement to file financials under Rule 3-
05
of Regulation S-X for each of your acquisitions.

6. Further, we note that you utilized a third party appraiser to
value your preferred stock in connection with your acquisition of
NEC
eLuminant Technologies.  While you are not required to make
reference
to this independent valuation, when you do you should also
disclose
the name of the expert and include the consents of the expert.  If
you decide to delete your reference to the independent valuation,
you
should revise to provide disclosures that explain the method and
assumptions used by management to determine the valuation.  Revise
to
comply with this comment in future filings.

Note 3 - Long-lived Assets, Goodwill and Other Acquisition-related
Intangible Assets, page 61

7. Tell us the details of your methodology for the market approach
used in November 2004 and 2003, and how you concluded there was no
impairment of goodwill.

Note 6 - Stockholders` Equity (Deficit)
Stock Option Plans, page 68

8. Tell us how you accounted for the stock options that were
granted
in August 2003 in exchange for certain other options as disclosed.

Note 9 - Income Taxes, page 73

9. Disclose in your amended return the details regarding the
change
in the tax contingency reserve in 2003.  Provide FAS 5 disclosure.

Note 10 - Related Party Transactions, page 75

10. Disclose your accounting for the July 2002 cancellation of
$1.9
million in notes receivable.

Note 14 - Segment Information, page 78

11. Provide disclosure by country for your International segment.

Forms 10-Q for the period ended September 30, 2005

General
12. Revise as applicable for comments issued regarding Form 10-K
for
the year ended December 31, 2004.

Note 7 - Commitments and Contingencies
Sale of inventory and licensing of certain intellectual property,
page 12

13. Tell us the amount that you received from your sale of
inventory
and other assets in the first quarter of 2005.  Expand your
disclosure to discuss the terms of the licensing agreement.

14. We note your sale of assets in the quarter ended September 30,
2005.  Tell us why this disposal was not accounted for as
discontinued operations under SFAS No. 144.

Liquidity and Capital Resources, page 22

15. Revise your liquidity discussion to disclose your amended
credit
facility expires in February 2006, as noted on page 11.  Discuss
in
greater detail what financing alternatives you are currently
evaluating and the potential consequences to your liquidity if new
financing agreements are not executed prior to your credit
facility
expiring in February 2006 and your balloon payment coming due in
April 2006.

Form 8-K/A No. 1 for September 1, 2005

16. Revise footnote 3 to provide greater detail for each
adjustment.

* * * * *

      As appropriate, please amend your filing and respond to
these
comments within 10 business days or tell us when you will provide
us
with a response.  Please file your response on EDGAR.  You may
wish
to provide us with marked copies of the amendment to expedite our
review.  Please furnish a cover letter with your amendment that
keys
your responses to our comments and provides any requested
information.  Detailed cover letters greatly facilitate our
review.
Please understand that we may have additional comments after
reviewing your amendment and responses to our comments.

	We urge all persons who are responsible for the accuracy and
adequacy of the disclosure in the filing to be certain that the
filing includes all information required under the Securities
Exchange Act of 1934 and that they have provided all information
investors require for an informed investment decision.  Since the
company and its management are in possession of all facts relating
to
a company`s disclosure, they are responsible for the accuracy and
adequacy of the disclosures they have made.

	In connection with responding to our comments, please
provide,
in writing, a statement from the company acknowledging that:

* the company is responsible for the adequacy and accuracy of the
disclosure in the filings;

* staff comments or changes to disclosure in response to staff
comments do not foreclose the Commission from taking any action
with
respect to the filings; and

* the company may not assert staff comments as a defense in any
proceeding initiated by the Commission or any person under the
federal securities laws of the United States.

      In addition, please be advised that the Division of
Enforcement
has access to all information you provide to the staff of the
Division of Corporation Finance in our review of your filings or
in
response to our comments on your filings.

      You may contact Bob Carroll, Staff Accountant, at (202) 551-
3362 or Sharon Virga, Senior Staff Accountant, at (202)551-3385 if
you have questions regarding comments on the financial statements
and
related matters.  Please contact me at (202) 551-3810 with any
other
questions.

								Sincerely,

								/s/ Kyle Moffatt for

								Larry Spirgel
								Assistant Director

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Mr. Kirk Misaka
Zhone Technologies, Inc.
December 28, 2005
Page 5

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

         DIVISION OF
CORPORATION FINANCE

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