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INTERNET FAX TO CHALLENGE PSTN FAX

JOINT ITU - IETF STANDARD PUTS $25 BILLION NORTH AMERICAN ANNUAL PSTN FAX INCOME AT RISK

MACHINES USING NEW STANDARDS AVAILABLE SOON- ADVOCATE SUGGESTS IFAX IS TROJAN HORSE FOR ADOPTION OF IP TELEPHONY pp. 1 - 10

Richard Shockey takes us on a tour of the likely fallout from the completion of joint ITU - IETF Internet fax standards. He points out that Internet fax should deploy even faster than Internet telephony since it is simpler to deploy and far more forgiving of network congestion and delay. Internet Fax is coming in two parts. The first is a store and forward model that is essentially based on the MIME attachment of TIFF files to standard E-Mail messages delivered by SMTP. The standards for this model are found in the IETF - ITU agreements of January 1998.

The second part is an Internet draft that extends SMTP itself. The draft turns a fax machine into a virtual SMTP server so that transmission of the fax from point-to-point happens in real time. The protocol would extend SMPT beyond its function of a simple mail transport protocol to the point where, when a transport session is established, the user can exchange capabilities between devices - something that cannot be done with store and forward mail.

Implementing these will be a series of hybrid "stupid-smart" devices that bridge faxes between the PSTN and the Internet. The Panasonic FO-770I, which is already on the market, is one such device with almost all the capabilities of the new standard . Load your fax, toggle "send" in one direction to transmit via the PSTN, toggle "send" in the other direction to go via the Internet. Shockey and others are working on the introduction of inexpensive "black boxes" to connect standard G3 faxes in small-office, home- office (SOHO) environments directly to one's PC and from there to the Internet.

Where is this headed? Ultimately the intelligence will be in the keysets on everyone's desk and not in some centralized gateway device. If telephones, fax, printers, copiers and other standard office devices become more intelligent, as predicted by Moore's law, no intermediation between the Internet and the PSTN will be necessary. The gateways will become superfluous and the Internet will have completed its cannibalization of the PSTN.

Surveys show that every Fortune 500 company is spending an aggregate of around $15 million a year on fax. 40% of all trans- Atlantic and trans-Pacific telephone calls are fax related. The early adapters of Internet FAX have realized that they would not need PSTN fax any more. 5% of the 25 billion dollar annual North American fax bill is likely to move rather quickly to the Internet. When it does, the screams from the PSTN side will be enormous. Fortune 1000 CIOs have just spent a fortune with Cisco or Bay Networks or Newbridge. They are soon going to realize that they can leverage their investment by getting rid of their PSTN connected fax machines as they become aware that they can start running voice and fax traffic over their IP networks for a very very small incremental cost. Some folk like Robert Metcalfe and Charles Ferguson are coming to believe that the Telco's are well aware of what is happening in the market place and are using every means necessary to preserve and defend their business models and monopolies. And that, rather than actually compete in the market place, they have chosen the courts and political process to defend their positions.

Charles Ferguson's piece on the economics of the LEC environment is found at http://www-eecs.mit.edu:80/people/ferguson/telecom/ We urge readers to read it from cover to cover. Its analysis of the drag placed by the LECs on US economic growth is extremely powerful.

MAGAZINER'S GREEN PAPER A GOOD START

SHOWS COMPLEXITY OF BUILDING A GOVERNING STRUCTURE FOR INTERNET -MANY IMPORTANT DETAIL'S MISSING -TIME LINE TIGHT

PLAN FOR USER BOARD MEMBERS SHOWS OUTSIDE INTEREST'S DESIRE FOR CONTROL pp. 1, 11 - 13, 24

Ira Magaziner released his Green Paper in the midst of what Jon Postel called a test of the ability of root servers to point elsewhere than NSI. Critics called Postel's "test" a hi-jacking.

The paper makes a good start, but it shows the complexity of trying to put an IANA Policy Council in place. Seven technical and seven user members will not be productive. Einar Stefferud offers a us a critique of the proposed structure saying: "my basic preferred governance model is that of 'customer or producer cooperatives' wherein the customers or the producers play the role of owners and elect the board of Directors and the Executive."

"I also advocate subjecting the Board and the Executive to a requirement to make available information to answer questions from the customers or producers who should have a right to ask any questions about any aspect of the cooperative's business operations, finances, policies, and possible conflicts of interest, etc. In short, the customers or producers should have all the rights of owners, and the whole thing must operate under 'sunshine law styled rules' of openness."

A different commentator said of the user member board members: "The real issue is whether the Internet is going to be allowed to grow into the enormous intellectual, social and economic force for facilitating individual freedom that it has the potential to become or if it's growth will be limited by those who are sophisticated enough to anticipate the decline of their own interests if that growth is maximized." [Editor: Namely the Carriers and LECs.]

The processes now on going will reshape the workings of the Internet in very significant ways. It is important that they be carried out with maximum care and deliberation rather than rushed to meet an arbitrary deadline. It is also important that Ira Magaziner signal his understanding of this as soon as possible.

CARRIER CONSORTIA ALLEGED CARTEL POLICIES KEEP INTERNET BANDWIDTH PRICING HIGH

WIDELY KNOWN BUT LITTLE TALKED ABOUT TACTICS RATION BANDWIDTH AVAILABILITY OF TRANS-OCEANIC CABLES

PRACTICE KEEPS GILDER'S PREDICTIONS OF PLENTIFUL BANDWIDTH AT BAY, pp. 14 - 16

We publish an anonymous interview with an authority who agreed to talk about the marketing and pricing practices of the trans-oceanic carrier consortia which allegedly dribble enough capacity onto the markets to keep prices high and act to set annual price ranges for availability of new leases. This is an area we first became aware of after our October 1996 interview with Teleglobe. We have since found a small number of people who would talk about the carrier consortia practices in private. Up to now, we have never found someone who would talk in front of a tape recorder.

If these practices continue outside the view of public knowledge, the era of the availability of virtually unlimited cheap telecommunications bandwidth envisioned by George Gilder, may never arrive. New blood represented by Qwest, Level 3 and Project Oxygen is coming into the market. No matter what happens in the US, without serious changes in trans-oceanic cable pricing, there will be Atlantic and Pacific choke points. A little recognized factor in the current continued high cost of DS3 circuits and long lead time for delivery is the need for carriers to calculate the load these circuits will place on trans-Atlantic and Pacific choke points and ensure that the bandwidth provisioned through their respective cable consortia is adequate.

We asked two sources whom we consider authoritative to review this article. One, a bandwidth purchaser, responded that it is right on the money. The second, a bandwidth seller claimed that prices are dropping. The first countered that declines are tiny. Both were surprised that we had gotten anyone to comment - even off record.

DAVE HUGHES HITS UNIVERSAL SERVICE FUND REFUSAL TO PAY WIRELESS K- 12 CONNECTIVITY

SLC ACTION SHOWS BANKRUPTCY OF HIDDEN 2.25 BILLION TAX ON PHONE USERS IMPLEMENTED FOR BENEFIT OF LECS, pp. 17 - 19

The Schools and Libraries Corporation has shown its colors as a play toy of the LECs in the imposition of a 2.25 billion annual tax on local phone service to connect our K - 12 schools and public libraries to the Internet with a decision to forbid payment for spread spectrum, part 15, wireless access devices to connect schools and libraries to the Internet. We offer a summary of Hughes' comment and strategy aimed at overturning the decision.

MINI BOOK REVIEWS, p. 19

Mini book reviews of Quality of Service by Paul Ferguson and Geoff Huston and the Electronic Privacy Papers by Bruce Scheier and David Banisar.

DISCUSSION OF BOGUS ROUTE INJECTION AND OTHER ISSUES FROM NANOG

IMPORTANCE BUT DIFFICULTY OF CROSS PROVIDER COOPERATION EMPHASIZED pp. 20 - 22

Comment from NANOG on problems caused by those who inject routes that they don't own. Further comment on peering issues.