Fonix Launches VoIP Service; IP-Based Telecom Service Available for Small- to Medium-Sized Business Customers in Southeastern Region

Business Wire, Oct 4, 2004

ATLANTA -- Fonix(R) Corp. (OTC BB: FNIX), a communications and technology company providing integrated telecommunications services and value-added speech technologies, will begin offering Voice over Internet Protocol (VoIP) service. Fonix IP Phone Service(SM) will initially be available to small- to medium-sized business (SMB) customers in the Southeastern United States, providing them with an economical alternative to private branch exchange (PBX) or central office exchange (Centrex) services with the flexibility and durability of Internet Protocol (IP).

The Fonix IP Phone Service, Fonix Fone(SM), offered to business customers, is a feature-rich service package that provides all Class 5 switching features: E911 (911 service with enhanced abilities to locate mobile customers), conference calling, unified messaging, "find me - follow me" (virtual call forwarding) and a user portal. The service works over the customer's existing broadband connection and provides proven quality of service and interoperability with all common VoIP protocols. Fonix IP Phone Service is a cost-effective solution, coupling all the feature and functionalities of a virtual private network at a lower price than traditional voice service platforms.

"We see a tremendous need for a hosted voice service capability in our SMB market," said Dale Smith, senior VP and general manager of The Fonix Telcom Group. "Fonix IP Phone Service is a robust package that offers free on-net calling and full-feature PBX functionality, without the need to install expensive PBX hardware at the customer's location. This service demonstrates Fonix's commitment to aggressively increase market share by offering leading technology product solutions and give our customers greater efficiency and a better value than traditional voice telephony products."

VoIP is rapidly becoming the new standard for voice traffic. A recent Gartner Group report estimated that by 2009, 90 percent of all new corporate telephone systems will be IP-enabled. The lower service fees of VoIP are a key driver of its growth. Phone calls over a VoIP network bypass the traditional telephone company and are transported at a low or no cost via the Internet, reducing long distance phone charges. Calls made from a VoIP line to an end user on the traditional switch network are also far less expensive.

For more information regarding Fonix IP Phone Service, please contact LecStar at 404-659-9500 or visit www.lecstar.com.

About Fonix

Fonix(R) 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.

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Media Contact: Andrea Faville

The Investor Relations Group

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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.