INGATE

From The Sip Trunking Experts

[August 17, 2004]

Fonix Delivers VoIP Via Power Lines; Innovative BPL Technology Targeted for Availability Q4 2004 for Customers in Southeastern Region

ATLANTA --(Business Wire)-- Aug. 17, 2004 -- Fonix Corp. (OTC BB: FNIX), an innovative communications and technology company providing integrated telecommunications services and value-added speech technologies, announces the successful delivery of Voice over Internet Protocol (VoIP) on Broadband over Power Lines (BPL), giving customers more choices in how they receive voice, data and media services in their homes or businesses. On Aug. 6, 2004, Fonix's recently acquired subsidiary LecStar Telecom Inc. completed installation and testing of the new service. LecStar is among the first to implement this technology in the United States.


LecStar is currently field testing its BPL service with a Southeastern utility company. About 20 percent of the customers in the six-month trial will test LecStar's new Voice over Internet Protocol (VoIP) on BPL service. BPL, which delivers high-speed Internet and voice services over existing power lines, represents one way Fonix plans to introduce cost-saving technologies to businesses and individuals in its growing network of telecommunications customers.

"New technology has changed the rules of the telecom game, and users demand and deserve more flexibility at a better price," said Thomas A. Murdock, Fonix president and CEO. "Technologies like VoIP on BPL let us give our customers freedom of speech, a true choice in their voice and data services. As we continue building our customer base through acquisitions like LecStar, Fonix can introduce these innovative services to new markets, and we anticipate the costs will ultimately go down for everybody."

Fonix plans to expand its offering to customers in areas where electric utilities have made BPL upgrades to the power lines, enabling the delivery of this service wherever the technology offers a cost-effective alternative to traditional methods of reaching customers. LecStar has experience in developing channel marketing through local and regional utility companies, which will allow it to easily capitalize on BPL technology.

As part of the trial, LecStar will offer approximately 30 utility customers high-speed data services, which will operate as fast as upgraded cable systems and faster than standard DSL services. The offering has numerous advantages over traditional high-speed services, including the ability to use every outlet in the home as an Internet portal. The product is designed to be synchronous -- quickly uploading and downloading information -- unlike DSL and cable that can only offer fast downloads.

"Customers want quality, connectivity and affordability from their telecommunications provider," said W. Dale Smith, LecStar Telecom president and CEO. "VoIP on BPL not only rivals traditional delivery methods on speed, but it also matches their sound clarity and brilliance at a competitive price."

About Fonix

Fonix Corp. is an innovative communications and technology company that provides integrated telecommunications services and value-added speech technologies. Through its subsidiary, LecStar Telecom Inc., a rapidly growing Atlanta-based provider of communications services to businesses and consumers in the Southeast, Fonix provides a full array of wireline voice, data, long distance and Internet telephone service utilizing traditional lines as well as next-generation networks such as Voice over Internet Protocol, Broadband over Power Lines and fixed wireless technology. In addition, Fonix currently offers voice technology solutions for mobile/wireless devices; interactive videogames, toys and appliances; computer telephony systems; the assistive market and automobiles. The combination of interactive speech technology and integrated telecommunications services allows Fonix to provide customers with comprehensive cost-effective solutions to enhance and expand their communications needs. For more information regarding LecStar Telecom Inc., its products or services, please contact LecStar at 404-659-9500 or visit www.lecstar.com. For more information about Fonix speech solutions, contact a Fonix representative at 801-553-6600 and say "Sales," or visit www.fonix.com.

Statements released by Fonix that are not purely historical are forward looking within the meaning of the "Safe Harbor" provisions of the Private Securities Litigation Reform Act of 1995, including statements regarding the company's expectations, hopes, intentions and strategies for the future. Investors are cautioned that forward-looking statements involve risk and uncertainties that may affect the company's business prospects and performance. The company's actual results could differ materially from those in such forward-looking statements. Risk factors include general economic, competitive, governmental and technological factors as discussed in the company's filings with the SEC on Forms 10-K, 10-Q and 8-K. The company does not undertake any responsibility to update the forward-looking statements contained in this release.

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