PHOTOCHANNEL PARTNERS WITH TELUS TO EXPAND MARKET LEADING TECHNOLOGY & NETWORK

PhotoChannel Storage Grid to be launched within TELUS’ data centre


VANCOUVER, B.C. - May 10, 2004 - PhotoChannel Networks Inc. (TSX-V: PNI and OTCBB: PHCHF) and TELUS (TSX: T, T.A; NYSE: TU), the largest telecommunications company in Western Canada and the second largest in the country, today announced the next step in its ongoing partnership to enhance the digital photo customer experience by expanding innovative network solutions for photofinishing services.

B.C.-based PhotoChannel's partnership with TELUS will now provide retailers and consumers with secure storage and full power and bandwidth redundancy for PhotoChannel's innovative digital photo network at the TELUS data centre in Burnaby. In conjunction with this hosting relocation, PhotoChannel will be migrating its customers onto its new PhotoChannel Storage Grid.

"TELUS has been involved as an investor and business partner with PhotoChannel for almost two years," said Mark Schnarr, executive vice president of corporate development at TELUS. "The rapidly expanding adoption of PhotoChannel's digital photo finishing solution in the marketplace is a testament to the need for using innovative technology to bring user-friendly online solutions to customers. We are excited to expand our partnership with PhotoChannel and to showcase these solutions through TELUS' world class data centre."

"Since December 2003, we have been proactively developing the PhotoChannel Storage Grid, a grid-based storage solution for digital image photo files, based on computing solutions now sweeping the high tech industry," said Peter Scarth, CEO of PhotoChannel. "We have chosen to partner with TELUS and use its Burnaby facility to help meet the growing needs of our customers, including Canada's largest photofinishers such as Wal-Mart Canada. Together, this exciting new platform will allow us to scale in an efficient and cost effective manner, while offering our customers the most reliable solution in the marketplace."

About TELUS
TELUS (TSX: T, T.A; NYSE: TU) is the largest telecommunications company in Western Canada and the second largest in the country, with more than $7 billion of annual revenue, 4.8 million network access lines and 3.5 million wireless subscribers. The company provides subscribers with a full range of telecommunications products and services including data, voice and wireless services across Canada, utilizing next generation Internet-based technologies. TELUS was a premier founding supporter of the successful bid to bring the 2010 Winter Olympic and Paralympic Games to Canada.

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Warning: The TSX Venture Exchange has neither approved nor disapproved the information contained in this release. PhotoChannel relies upon litigation protection for any "forward-looking" statements.

Certain statements in this announcement, including statements concerning our plans, intentions and expectations, contain "forward-looking statements" within the meaning of the Securities Act of 1933 as amended. Forward-looking statements are based on the opinions and estimates of management at the time the statements are made and are subject to certain risks and uncertainties that could cause actual results to differ materially from those anticipated in the forward-looking statements. These statements are not guaranties of future performance and are subject to certain risks, uncertainties and assumptions that are difficult to predict. Readers are cautioned not to place undue reliance on these forward-looking statements that speak only as of the date of this announcement. Factors that could affect our actual results, include, among others, Photochannel’s recent change in business focus, anticipated losses, unpredictability of future revenues, potential fluctuations in quarterly operating results, unproven business model, ability to make additional acquisitions, risks related to acquisitions, achieving adequate market share, brand awareness, competition, risks of maintaining and creating new business relationships, management of potential growth, risks of system interruption and risks of international operations. More information about factors that could potentially affect our actual results is included in Photochannel’s filings with the Securities and Exchange Commission including the Form 20-F related to Photochannel. We undertake no obligation to update publicly any forward-looking statements to reflect new information, events or circumstances after the date of this release or to reflect the occurrence of unanticipated events.