New matters of fax: Internet faxing is changing the method and the market for fax routing

It was only a matter of time before the Internet-which these days seems to touch everything and everyone-reached the lowly fax machine.

Now an office staple worldwide, the fax machine was the vehicle of choice long ago when the data information had to be there right away. E-mail and the Internet have since filled that role. However, within the last few years, technology developers began answering the obvious question: How can the broad reach and low-cost nature of Internet be brought to the fax?

The answer is Internet faxing-using some portion of the worldwide Internet backbone to send and receive data in the form of a fax. The advantage is that by moving the information over the data network instead of the voice network, costly long-distance phone calls for faxing can be avoided.

The number of fax pages rerouted away from the public switched network in the U.S. will grow from 44 million in 1997 to 5.6 billion in 2000, according to a November 1997 study done by Dataquest, a global market research and consulting company. The growth is occurring as new products and services enable companies to send their fax traffic efficiently and securely over the Internet and intranets.

Dataquest's survey shows the strongest demand for Internet fax solutions is from large businesses. Large and medium-sized businesses are expected to represent 74% of all Internet fax traffic by 2000, says Andrew Johnson, senior industry analyst for the company's fax and multifunction products in North America.

"Fifty-one percent of all outbound faxes are sent to destinations within a company," Johnson says. "This intracompany faxing can very easily be routed over the company intranet to save thousands of dollars in telephone charges."

A survey conducted in December by Sprint Business found that small business owners and entrepreneurs also plan to use fax-over-voice line technology to increase productivity in 1998. Of the 500 small business owners surveyed, 38% said the fax machine is the technology that has the greatest impact on business productivity.

The new faxing solutions are based on Internet protocol (IP) packet-switched telephony, which leverages network access and high bandwidth to derive cost and time management savings (Table 1).

"The growth in Internet fax is dramatic and is expanding into new applications every day," says Maury Kauffman, enhanced fax consultant of the Kauffman Group. "Users demand real-time faxing and cost savings, which is exactly what successful fax vendors are offering today."

At Fortune 500 companies, a recent study by Gallup/Pitney Bowes found that 41%, or $15 million, of the average annual $37 million telephone bill is attributed to faxing.

"Network managers understand there is money to be saved and network efficiencies to be gained by moving away from traditional voice-line faxing," says a spokesman for Brooktrout Technology Inc., a Needham, Mass.-based provider of software and hardware products for system vendors and service providers. It now offers TR114 Series multichannel fax and voice boards. "Therefore, sending documents over IP networks has quickly evolved to become the fax method of choice."

Purists, however, would not call that process Internet faxing, but rather Internet Protocol faxing, says Pete Davidson, president of Davidson Consulting, a fax market research and consulting firm in Burbank, Calif.

In IP faxing, documents are sent from a fax machine onto the backbone of the contracted Internet service provider, bypassing the public network to the nearest node the ISP has installed and on to the desired destination. >From that point, a reconnection is made to the public network, and what is generally a local phone call is made to the end-point fax machine and the information is transmitted.

Instead of using the public network to make a long-distance phone call from one fax machine to another, the documents get close enough to transfer via a local call, saving the users the difference-usually pennies.

"But because of that off-Net jump at the end, it's less like Internet faxing and more like node-to-nearest-node routing," Davidson says.

Danny Briere, president of TeleChoice Inc., agrees. "Every headline you see today is shouting about Internet faxing, when the truth is very few people are using the Internet because it has not proven itself to be reliable. The more nodes you have on your own network to offer customers, the more control a company has over quality of service.

"When these companies talk about Internet faxing they're really talking about using their private backbone, and that's the same thing as an intranet," he says.

One company offering this solution is New York-based .comfax Inc. (pronounced dot-com-fax). Its NetDispatcher product bridges the fax machine to the telephone jack and reroutes the calls from an interexchange carrier's network. Via a local call, an ISP server receives the information and sends it over the Internet backbone. Another local call completes the transmission at the closest ISP server point. Customers are charged per use. .Comfax has partnerships with more than 30 ISPs and promises savings of up to 50% on fax bills.

"NetDispatcher is a great way to breathe new life into traditional fax machines," says Ben Feder, president and CEO of .comfax. "There's an impression that fax machines are dinosaurs in the age of e-mail. But there are still plenty of documents that are best sent by fax to retain important formatting. Faxing is the most convenient and efficient way to send them, and the Internet is ideal for transmitting high quality images."

The benefits of this partly public network, partly Internet fax-to-fax solution include the fact that employees can use it without learning new skills. .Comfax has user account information on its Web site so customers can check their bills any time. The company also handles maintenance, billing and other administrative duties.

The downside is that it "isn't necessarily less expensive than using the phone networks," says Davidson. "Some intrastate local calls cost just as much, if not more, than interstate calls. Just because it's closer doesn't mean it costs less.

"If you live in the U.S. and most of your business is in the U.S. then it's not a great deal. If you live in China and do a lot of business in the U.S., then it's probably the best deal you'll ever get in your life because international calls are so expensive," he says.

Pioneers of the Internet faxing trend already are trying to take advantage of such international potential. For instance, the Global Reach Internet Consortium, founded by AimQuest, developer of the AimFax Internet faxing solution, includes more than 40 ISPs around the world that are trying to provide seamless and low-cost Internet faxing globally.

Still, partial Internet faxing is a valuable move for some companies that are not sending faxes so far.

"NetDispatcher gives ISPs, resellers, CLECs and telcos the ability to offer this service to their customers," Feder says. "There has been a big shift from voice to data, and these companies need to do a lot more in the short term. This helps them get to market faster."

A step beyond the hop-on, hop-off nature of partial Internet faxing is the practice of faxing from personal computers directly over the Internet.

FaxSav Inc. of Edison, N.J., offers FaxLauncher, software that can be loaded onto any Windows application. Once documents are completed, they can be addressed to a destination fax and sent over the Internet. The sender receives confirmation that the fax was received. The software is free, and customers are charged by the page for faxes successfully delivered.

The company also deploys FaxMailer, where basic e-mail messages and packages are composed on the PC, then compressed and delivered to any fax machine, reaching those who do not have Internet e-mail, but do have a fax machine. For FaxMailer, no software is needed if the client already has e-mail capabilities.

"You can edit your messages, add on to the fax and send faxes to 10 people at once," says Thomas Muraski, FaxSav's president, CEO and board chairman.

The combination of faxing and e-mail forces some users to make hard choices, Davidson says.

"These days people are very aware that a traditional fax gets there pretty much right away, while an e-mail gets there when it gets there," he says, referring to delays experienced on the Internet and Web servers.

"Still, such mail-to-fax conversions are pretty fantastic," he adds. "A worker can get important documents to a traveling executive without any additional training."

Other IP fax solutions on the market work over any network. NetFax of Clearwater, Fla., has been working for two years to equip fax machines with a variety of direct data backbone interfaces. The company uses compression technology-a process it calls "naxing"-that speed up the delivery of traditional faxing. In the second quarter, NetFax expects to market one product that will work on the public network, the Internet, frame relay networks and virtual private networks under standards-based, open systems intelligence.

NaxPort 300 is about the size of a telephone with an LCD screen and a keypad. Once attached to a fax machine, the NaxPort 300 emulates the central office and provides the fax machine with dial tone. Fax data is sent from a fax machine to the NaxPort 300 and compressed using two-dimensional compression technologies.

"Our intelligent architecture bundles everything in terms of an e-mail, then uses the transport mechanism, be it a LAN or an ISP, to deliver the fax," says Paul Penrod, vice president of research and development for NetFax. "The 300 will serve as a true network computer."

NetFax also will retail the NaxPort 200, a version that is LAN-based only.

NetFax recently lured Joseph Dunsmore to be its CEO and chairman. Dunsmore left his position as vice president of U.S. Robotics/3Com-where he oversaw the 56K X2 program-to head the fledgling company. Dunsmore says he was attracted by the strength of NetFax's products and growth potential.

"We're positioned very well in an emerging and very exciting technology," he says. "It's not often that you can find a start-up opportunity where the company has an array of strong products, the talent and intellectual property to be a major player."

It will go up against UUNet, which is likely to become one of the biggest players in the IP faxing arena because it has the largest IP network. UUfax is touting itself as the solution for all users, including small home offices, mid-sized businesses and large corporations with connections through PBX systems, company intranets and existing Internet connections.

"UUfax has more pieces of the complete IP faxing puzzle in place than anyone else," Davidson says. "As the largest ISP, they have the largest number of data drop-off points. With their MCI partnership they also have those connections on that network as well as access to those large business customers. And CompuServe gives them the business management part. They have the potential to offer the service more cost effectively than anyone else."

However, TeleChoice's Briere wonders for how long. As IP faxing becomes more widespread, the manufacturers of fax machines already are starting to make fax machines smarter, with Ethernet connections.

"I predict that in 1999, we'll see a good 3 million to 4 million fax machines shipping out from the manufacturers with IP functionality. Then what's the point of enhanced fax services? All these other things are just interim solutions."

Smarter fax machines also will increase the fax equivalent of junk-mailing, a practice that has been fairly small so far, says Briere.

"What does all this mean for junk fax? Oh, I don't even want to think about that," he says.