October 1999

Fax And The Internet: An Unlikely Marriage?

BY JOSHUA ADELSON

For several years, Internet fax has been touted as one of IP telephony’s “killer applications.” Routing faxes on the Internet was cheap or free, and faxes were more tolerant of network delays that hindered the use of the Internet for real-time voice, so the argument went. Everything was poised for an explosion.

But it didn’t explode. With the exception of a few pioneering service providers, most people have continued sending faxes the old familiar way, and continue using the Internet for e-mail and Web browsing.

Now, Internet fax appears to have passed a huge milestone. Using a variety of business models, service providers are offering Internet fax capabilities, often in conjunction with major ISPs and Web portals.

If you are an Internet service provider, you should examine Internet faxing as an opportunity for increased service revenues from your customer base. If you are an IS/telecom manager, Internet fax services merit examination as a means to boost productivity, and control the still-increasing fax telephone bill.

FROM APPREHENSION TO ADDED VALUE
Early attempts to provide Internet fax were mostly based on cost savings, using the Internet or private IP networks as a low-cost or no-cost long-distance transport vehicle. However, in reality, with the exception of a few high-volume users, the rates these services offered were not significantly lower than PSTN rates. The PSTN’s higher long-distance cost component was offset by its much larger economies of scale. Individual users, for whom faxing was occasional, did not see a compelling reason to switch away from familiar methods. Businesses, whose aggregate fax traffic might have been sufficient to cost-justify a switch, were concerned about the privacy and reliability associated with placing important business communications on the Internet.

Now, service providers and system vendors have gone beyond the simple “it costs less” pitch to offer innovative Internet fax products and services that are attracting the attention of individuals and businesses alike. Companies such as eFax.com, jfax.com , and onebox.com all offer services oriented toward individuals, while companies such as Fax2Net, FaxNet, iService, LANSource, NetMoves (formerly FaxSav) and others are more oriented toward business organizations or service-provider franchising. (For a more complete listing of Internet fax products and services, see our Fax Roundup in the September issue of Internet Telephony�).

These companies each offer unique service combinations, and prospective users are advised to visit the companies’ Web sites to determine which offering is most appropriate for them. Here is a sampling of the capabilities offered:

• A personal faxes number for incoming faxes that is forwarded to the subscriber as an e-mail attachment.
• Outbound faxing via standard e-mail and groupware packages. Among other things, this eliminates the need to disconnect from the Internet in order to send a fax.
• Internet-based fax storage, for retrieval from any location.
• Web-based unified messaging, including fax, along with voice mail and e-mail.
• Broadcast services for internal or external business communications. Broadcasting can be integrated with sales automation or financial software to leverage the valuable databases within such applications.
• Fallback capabilities whereby faxes directed to a traditional fax machine are automatically routed to a secure mailbox when the fax machine is busy.
• Notifications of new messages via pager or cell phone, and delivery confirmations.

No single provider offers all of these services — and few single users need all of them — but clearly, value-added services have achieved critical mass in the marketplace. (Table 1 highlights typical fax services.)

NEW BUSINESS MODELS
As often as not, the Internet’s impact on a business is to change the buying-and-selling business model as much as the actual product being delivered. The new breed of Internet fax service and system vendors have been quick to adapt to, and capitalize on, this reality. Here are some examples of the variety of business models that have emerged:

• Completely free “light” services offered to individuals, with the opportunity to upgrade to higher-functionality, pay-for packages.
• Large-distribution (10,000+) broadcasts charged on an event basis.
• Replacement of incoming fax machine “pools,” for a monthly and per-fax fee.
• Services that are operated by the fax provider but sold on a franchised basis through ISPs. Franchised services can be customized and private-labeled by the ISP.
• Clearinghouse billing services that allow faxes to be originated and terminated by different providers.

MAKING SURE IT WORKS
One of the reasons faxing continues to proliferate even in the face of e-mail is that it is perceived — rightfully so — to have higher reliability and document integrity for critical business communications. To be successful, Internet faxing must achieve equal or better reliability and performance than traditional PSTN faxing.

Most ISPs have an investment in dial-up access concentrator hardware that, theoretically, can transmit faxes. However, these devices have really been designed for data modem operation, with less attention focused on fax performance or interoperability. In cases where the fax is sent as an e-mail attachment, the “fax” capability of the access device is not really an issue. But where access devices must communicate directly with a fax machine, that access device becomes a critical link in the success or failure of the service.

Savvy Internet fax companies are quickly coming to the same conclusion that “traditional” fax service providers and LAN fax vendors reached long ago: Fax services should be deployed on intelligent fax boards. Unlike the data modem chipsets that are used in typical Internet access concentrators, intelligent fax boards are designed specifically for robust interoperability with the 100+ million fax machines installed around the world today. In addition to superior call completion, intelligent fax boards often connect at higher transmission rates, and perform maximum on-board compression; together these capabilities reduce transmission times and, as a result, last-mile toll charges.

Applying the “Internet business model” to fax services raises the stakes for reliability and interoperability. Free upfront services mean rapid growth in volumes, and this in turn can lead to enormous operational costs if the system does not operate reliably. Inability to complete a fax transmission is usually solved by manual intervention. If a $10/hour employee spends just five minutes resending a fax transmission, that will cost the company nearly a dollar — not a very profitable way to deliver a free fax! Imagine millions of faxes being sent daily, and the difference between 99 percent versus 95 percent transmission success rates can mean the difference between a lean operations staff versus a small army of customer service representatives. And, companies that are attempting to lure users from free to paid services will have little success doing so if their free trial services are not consistently reliable. (Table 2 shows how costly failed fax connections can be.)

In addition to overall higher reliability, intelligent fax boards tend to be more developer-friendly by offering extensive and consistent application programming interfaces (APIs) under widely supported operating systems such as Windows NT and UNIX. Since the value-added capabilities have spurred the growth of this business in the first place, it is critical that system vendors and service providers continue to be able to innovate and rapidly deploy new applications.

After a slow start, faxing and the Internet have converged to create a proliferation of useful services and exciting business opportunities. This is still a recent phenomenon, so we will no doubt continue to see innovations in the months to come. Quality operational deployments will be a key factor in the ongoing success of these services.

Joshua Adelson is market development manager, IP telephony, for the Fax & IP Technologies Division of Brooktrout Technology. Brooktrout Technology, a Brooktrout Comp-any, provides enabling technologies for customers to deliver voice, fax, and data solutions for the electronic communications market. For more information, visit the company’s Web site at www.brooktrout.com, or contact the author at [email protected]

TABLE 1: Internet Fax Service Capabilities    [return to text]

TABLE 2: Cost Implications Of Failed Fax Connections [return to text]