A killer app for IP?

UUNet Technologies announced plans last week to unveil the industry's most comprehensive Internet faxing service--a move that analysts say the Internet service provider will have to play carefully to avoid cannibalizing revenue from parent company WorldCom.

The UUFax service is expected to cost about 80% less than traditional faxing and 35% less than enhanced fax service bureau offerings, said John Sidgmore, chief executive officer of UUNet and vice chairman of WorldCom. "We thinkfax will be the next killer application on the Internet," he said.

Fax messaging company Open Port Technologies is supplying UUNet with more than 100 fax servers. Open Port will also supply customer premises equipment and is working with Ascend Communications to upgrade its dial access equipment, already deployed in the UUNet network.

UUNet's closest competitor is PSINet, which rolled out its InternetPaper service last month. Available in only five countries, the PSINet service uses the entire Internet to send documents and can send only from PCs to fax machines. The UUNet service, however, will use the UUNet backbone network, will be available worldwide and will allow any combination of transmissions among fax machines, PCs and e-mail.

However, Chris Mines, senior analyst at Forrester Research, is reluctant to paint a UUNet-vs.-PSINet picture. "The important thing here is that more and more ISPs are making significant commitments to using the Internet to attack the traditional telecom services market," he said.

But UUNet's attack has a twist in that WorldCom has a hefty stake in those services.

ISPs' best marketing tool is emphasizing how much cheaper their service is compared with thoseprovided by the circuit switched carriers, said Melanie Posey, senior analyst at IDC. But UUNet might not want to adopt that strategy.

That dilemma is likely to extend to the Internet telephony market when that service is eventually rolled out. Sidgmore downplayed the issue of Internet telephony last week, but Forrester Research's Mines believes that Internet faxing is an important precursor to Internet telephony.