Fax over IP: Great expectations

The concept of transmitting conversations over the Internet has attracted a lot of attention over the past year - if not a lot of business. But a similar concept, with another whole range of benefits, also is emerging: faxing over the Internet.

Largely because of its potential to lower telecommunications costs associated with traditional faxing, faxing over the Internet is expected to explode in the next several years.

Vendors are maneuvering to tap the burgeoning fax-over-Internet Protocol (IP) market with hardware, software and service solutions to enable users to bypass or replace traditional facsimile machines by rerouting faxes from voice networks to IP data networks.

These vendors say the potential cost savings - which come from not requiring a local or long-distance phone call - may be what first attracts customers, but that it is only part of the story.

Expectations are high as these products begin to hit the market. The number of IP fax pages sent in the United States will grow from 1.7 billion in 1999 to 14 billion in 2002, according to a study published in August by Gartner Group marketing firm Dataquest. The study predicts that IP fax traffic will account for 10 percent of all U.S. fax traffic by 2002.

Fax Options

Users interested in fax over IP can either purchase and install hardware and software on their own systems or outsource the capability to an IP faxing service bureau.

Omtool Ltd., for example, offers a software solution that runs on network servers and end-user systems. The client software is designed to provide users with a wide range of options for accessing and using fax server services. Some applications reside locally on an end-user's desktop, while others are "thin client" applications that open up a World Wide Web browser through which a user can access other server-based applications, such as enterprise e-mail systems.

The server-based software module essentially turns a fax machine into an IP device, providing it with a Web address, just like a desktop computer.

"This device then puts your fax machine on the network...and allows you to send and receive faxes through the device over your local-area network," said Mark Overington, Omtool's senior vice president of marketing and business development. "For people who are doing a large number of faxing over the corporate intranet, this is a way to reduce telecommunications expenses."

Fax over IP is especially advantageous for users on the same corporate intranet, he said.

If one user wants to send a fax to another user on the same network, traditional faxing would cost the company the price of a local phone call. However, with IP faxing, the server could pick up the fax and deliver it to the recipient via the corporate network.

"It would be the same as sending an e-mail," Overington said. "There would be no telephone call that would be placed. It's all over the corporate intranet."

In addition, Overington said IP faxing provides users with the ability to archive the traffic in a central storage area, enabling agencies to save copies of all incoming and outgoing faxes, a function not available with traditional faxing.

Bradley Feder, president of RightFax Inc., downplays the potential cost savings of fax over IP, instead saying its additional capabilities are the real draw.

Fax over IP, for example, makes it possible to receive faxes directly into e-mail and, on enterprise systems, to balance the workload across multiple systems, Feder said. Enterprise fax systems also can reroute outbound faxes to the closest fax server on an agency network or access the Internet for local delivery, reducing delivery costs regardless of where faxes are being sent.

RightFax provides hardware and software solutions for IP faxing, including a single dedicated fax server for specialized applications, such as claims processing, or for enterprise fax systems that include multiple fax servers connected over the Internet or through a local-area or wide-area network link.

Outsourcing Internet Faxing

Internet-based faxing also opens up another option: outsourcing fax operations altogether.

Joe Covey, vice president of marketing at MessageClick Inc., said users can exploit the power of Internet faxing without the typical investment of $15,000 to $150,000 for on-site fax servers. His company operates as a service bureau that delivers fax messages through a network of access points similar to an Internet service provider, charging customers between five and 10 cents per minute.

"If you create it on the PC, and you're connected to the Internet, why not send the fax over the existing connection?" Covey said. "A fax server is an expensive purchase up front and expensive to maintain."

Users of the service go to MessageClick's Web site, where they type in the content of their fax and the recipient's fax number. For items that are not in electronic form, the company offers inexpensive scanners for paper documents to be scanned into the fax form on the Web site.

"The goal here is for the company to get rid of their fax machines completely," Covey said. "Every employee gets their own phone number, and they can receive faxes in their e-mail. The faxes go directly to that employee, and it's confidential. Wherever you are, you'll get your faxes."

Maury Kauffman, managing partner of The Kauffman Group, noted that the biggest advantage of IP faxing is the ability to deliver faxes to e-mail systems.

"The killer application is faxing to e-mail," he said. "That one basic application is so worthwhile that it overshadows everything else. The biggest complication with all of faxing is, How do you get your faxes while you're on the road?"

Kauffman's market forecasts are similar to those published in the Dataquest study. He predicts that IP fax traffic will make up 5 percent to 10 percent of today's $100 billion market for fax traffic over public switched telephone networks. However, he noted that users should test the technology before making significant investments.

"You are somewhat complicating a very easy Process," Kauffman said. "There will be upfront expenses involved. The primary difference is to the end user - a different way to send their faxes. I advocate trying before you buy it. Have a service bureau first and see if you like it."

Premiere Technologies Inc. also offers fax delivery services via its private network, which supports more than 25,000 lines. In addition to simple fax delivery, the company also offers fax on demand, which is designed to simplify the fulfillment of frequently requested information in real-time and personalized delivery of faxes in their original e-mail formatting.

The Department of Housing and Urban Development uses Premiere to distribute special meeting announcements, internal field correspondence and a regularly published newsletter, said John Malone, Premiere's vice president of client services.

"The government has made many good attempts to endorse the Internet as a tool for education. Its use of IP fax sets a good example for Internet commerce," Malone said. "So many government agencies on the federal, state and local levels have made use of Internet and the Web to distribute information, and it would be consistent with this path to use IP fax as well."

Hurdles for IP Fax

While the fax-over-IP market is predicted to experience massive growth in coming years, not all agency officials are convinced of the need to use the Internet for fax traffic. Andy Wilson, Web manager for the Agriculture Department's Forest Service, said his office has replaced fax communications with e-mail for most of its communications with customers.

There is a segment of customers, however, that is not comfortable with e-mail. For these users, the Forest Service employs a fax redistributor. Officials use a modem to dial up a connection to the vendor to send the fax, which is then redistributed by that vendor. However, Wilson said he sees e-mail as being a much better distribution mechanism than faxing.

"I have a real hard time getting excited about fax over IP...because it's inherently more difficult for the agency to use...compared to e-mail," Wilson said. "E-mail is far less expensive than faxing. It's more malleable, more usable."

The Department of Health and Human Services has deployed a unified messaging system, an enhancement to typical IP-based telephony technology that provides a common inbox for voice mail, e-mail and faxes. While the system,which supports more than 6,000 users, includes software for sending and receiving faxes via e-mail, the agency does not use it because some parts of the department use Banyan Systems Inc. networks, which the messaging product does not support.

"We would not be able to offer the e-mail part to all users," said Marlyn Piper-Williams, system administrator for voice mail in HHS' Program Support Center Office. "It would jam the system up."

Still, she said that the ability of the system to deliver faxes to a centralized voice mail box, where it either can be pulled up on a user's desktop or sent to a printer, is much more beneficial than using traditional fax machines. "You don't always know when it's a personal or confidential fax," she said. "If it goes to your fax center, then everyone is privy to it. When it goes to your voice mail box you are the only person that gets to see that message."

In addition to overcoming any market resistance, fax over IP poses potential reliability and security problems for agencies, said Andrew Johnson, principal analyst for Dataquest's facsimile and multifunction products North America program. "It's very reliable when implemented properly, but not as reliable as people perceive hard-copy fax to be," Johnson said. "There are potential problems along the way. One out of every 100 e-mails get lost in cyberspace. That type of reliability is unacceptable to fax [users]."

While federal government market penetration in fax over IP may be somewhat limited now, most industry observers predict that faxing over data networks will become more popular as agencies move to merge voice and data networks to ride over digital IP networks.

"The attraction to the technology has shifted from cost savings to more of leveraging networks and coattailing convergence of networks and unified messaging," Johnson said. "As voice goes over digital IP networks, fax will kind of follow that trend."

-- Harreld is a free-lance writer based in Cary, N.C.

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At a Glance

Status: Fax over IP, like voice over IP, is seen as a potentially explosive market as the first full wave of products begins to hit the market. However, relatively little activity has occurred so far.

Issues: Fax over IP has the potential to save telecommunications costs and to provide users with advanced fax management capabilities, such as integration with e-mail. But e-mail itself, on the other hand, may be a much simpler solution.

Outlook: Uncertain. While some market research firms forecast a robust market, potential users, at least in the federal market, are not as convinced.