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FAX
MULTIPLEXING
Team
Leader:
Members:
Department
of Computer Science and Engineering
May 10, 1999
Proposal Overview
Fax has become
a standard for document exchange used by most of the companies nowadays.
The demand for this service is high and the traditional way to meet it
is by using the regular telephone lines. While this makes perfect sense
for domestic calls, it can be fairly expensive for international ones,
especially in countries where the telephone companies are still monopolistic,
the international rates are high, and the old analog lines there do not
support direct dialing to the United States. To further complicate the
situation, a regular A4 or letter-sized page often takes between one half
and two minutes to be faxed.
Our team aims to make use of an important advantage of the fax service, namely that it should not necessarily be conducted in real-time. This creates opportunities for multiplexing the message via the now popular and almost free global medium—the Internet. The quality of the service would thus be greatly improved, since:
b) using only domestic telephone lines in both the senders' and the recipients' countries is usually faster for faxing than using international lines, and consequently reduces the dial-in costs; c) using the Internet de facto implements message queuing, which relieves the customer from waiting for a busy line to become available. Fax multiplexing can be implemented using a very simple and inexpensive system of servers, and a good profit can be made with minor investments. Services similar to the one proposed above already exist. Unlike our proposed system, however, they do not support direct fax-to-fax transfer, thus bringing about two important limitations:
b) an assumption is made about the nature of the facsimiles, potentially discrediting what brought about the fax service in the first place: the need to directly transmit replicas of regular office documents, not printouts. Existing Markets
and Prices
Economies in
transition in Eastern and Central Europe have telecommunications markets
that started to demonopolize just recently. Perfect examples are Bulgaria,
where the Bulgarian Telecommunications Company is still the primary
service provider, Romania with its Rometelecom, and Hungary with
its MATAV, just to name a few. Due to foreign investments and force-gaining
competition, these companies had to rethink their policy and have systematically
tried to reduce their tariffs.
A comparison of the tariffs for international calls of the dominant telecom service providers in three Eastern European countries—Bulgaria, Romania and Hungary—with those of the British-American IDT reveals that the local companies charge at least twice as much for calls to the United States as IDT does (Chart 1).
A staff member is
necessary in each office, and a representative is needed for each country,
(except for the United States). The staff members will monitor the operation
of the servers, while the representative would have to oversee the enterprise
development. Contractor companies will handle the legal and tax issues.
The average monthly salaries vary from country to country and can be seen
in Chart 3, which was compiled from statistics published by the
Florida Trade Data Center in its Country Commercial Guides
for fiscal year 1998. Tables 3 and 4 reveal the monthly cost
of keeping the offices open.
TABLE
3
TABLE
4
The offices may be registered as offshore companies to take advantage of the nature of the business—a small international business entity. This will have two main advantages:
b) It will take care of the tax and legal issues, since companies like Consulco Business Services and Manx Offshore Administration already provide services in Europe and the United States. The cost of administrating an offshore company would be about USD 3,000 per year per country. The total cost of keeping the offices open for the first year is estimated to be USD 144,255, including the expenses associated with the direct marketing campaign detailed in Marketing (Chart 4 and Table 5).
TABLE
7
Marketing
As it was mentioned
in Budget and Price Formation , our type of fax service is initially
going to be implemented in Bulgaria, Hungary and Romania. Thanks to its
reformist government, Bulgaria, for instance, was named in The Wall
Street Journal in mid-April this year as one of the four most promising
emerging markets worldwide. Bulgaria, Romania and Hungary are seeking integration
with the European Union and other European structures, and are introducing
legislation that has already attracted sizable foreign investments.
The targeted
audience in these counties consists mainly of private companies, especially
large and medium-sized ones that regularly conduct business with companies
abroad. State-owned companies and governmental agencies there are not considered
potential customers, since they can do little about their choice of a telecommunications
service provider; normally this is simply the chief monopolist in the market.
Small, private businesses can also be ignored in the beginning, since they
are not going to contribute significantly to the success of the service
in these countries. Among our potential partners are also some non-profit
organizations (including certain foundations), which have a substantial
correspondence with all sorts of organizations abroad.
The contacts
of major potential customers can easily be obtained from such sources as
"Who Is Who?" publications, local Chambers of Commerce and Industry, and
Information Centers, just to name a few. This is a basic type of information
related to a simple listing of the large and middle-sized business in a
region, and can be obtained at a very low cost. The National Statistical
Institutes and related agencies can provide additional information about
the telecom services these companies commonly use. Thus the targeted audience,
as well as its needs, can be clearly identified and addressed directly.
Direct marketing
in these Eastern European countries has several advantages. First of all,
it eliminates many of the costs associated with a regular advertising campaign.
This also cancels the question about the scale of the campaign.
Another issue that makes direct marketing a natural choice is that we,
as a fax service provider, are trying to find our place in a marketplace
essentially occupied by monopolists. Keeping our company profile small
and working directly with our (even potential) customers is almost mandatory.
Successful introduction of the service can be achieved with two main points in mind:
b) the customers should be convinced that the service can be used just as easily as the existing one. 
The award winning
WinFax Pro developed by Symantec turns out to be the best choice for our
service because it provides convenient developers features not offered
by its competitors. The extensive testing that we have done proves that
the software is stable and reliable with a large variety of supported modems
and hardware in general. The Software Development Kit (SDK) that is freely
distributed with the package allows easy development and integration of
new features – a key issue for the successful future of the service that
we are about to provide.
The latest version
of WinFax Pro (9.0) is currently available for $110 per single copy. A
license can be obtained from Symantec since more than 10 copies of the
package are to be used, thus reducing the overall price significantly.
Equipment
Fax Server
– a PC at a clock speed greater than 200Mhz, having at least 32Mb
RAM, at least a 2GB HDD, Windows NT workstation OS, a pool of six EIA 578
Class 1 FAX & EIA 592 Class 2.0 FAX compatible faxmodems supporting
speeds of 2400, 4800, 7200, 9600, 12000, 14400 bps, an installation of
the custom version of Symantec's WinFax Pro 9.0 used to provide the FAX
service.
Global Server
– a PC at a clock speed greater than 200Mhz (an Intel Celeron at
466Mhz is a very cost/price effective solution), at least 64Mb RAM, at
least a 10GB HDD since all the faxes will be logged for security and legal
purposes, Windows NT workstation OS, one EIA 578 Class 1 FAX & EIA
592 Class 2.0 FAX compatible faxmodem supporting speeds of 2400, 4800,
7200, 9600, 12000, 14400 bps, a 10Mbit Network adapter, an installation
of the custom version of Symantec's WinFax Pro 9.0 used to provide the
FAX service.
Suggested Faxmodems
– extensive research has shown that in countries where the telephone lines
suffer from noise and the data connections are generally unstable the best
data exchange is achieved using faxmodems based on the Rockwell chipset.
This is the most effective performance/price solution since a single Rockwell
faxmodem supporting all the protocols that we need costs no more than $30.
A much more expensive solution is the Diamond Supra faxmodem, which provides
the same performance for a price three times as high. The 3COM/USRobotics
modems are found to be very expensive and they usually establish unstable
data connections on noisy lines. The only modem that performs well is the
USRobotics Courier, which is available for a price as high as $160 and
is not a good choice for our service.
Suggested Network
Cards – Because the service should be capable of easily switching between
different operating systems in case we want to transform it to UNIX (Linux,
BSD or Solaris) at a later time, the network cards to be used should be
fully NE2000 compatible 10 Mbit ISA. Those are also the cheapest network
adapters on the market. One of them hardly costs $10.
Suggested Internet
Line/Bandwidth
– The highest speed protocol for transferring faxes is 14400bps
and therefore any permanent Internet connection to our fax servers with
bandwidth higher than 14400bps will be an acceptable solution. These are
the most inexpensive leased Internet lines in the countries that we will
target and where the prices of the Internet are still high. The global
server in the US will have to be given a bandwidth of at least (number
of fax servers) x (14400bps) which is not a problem since the price of
a 2Mbit cable modem and service in the US is lower than the price of a
leased 14400bps line in Eastern Europe.
Preferred CPUs for the Fax Servers and the Global Server – Intel Celeron 466. A few people know that the Pentium Celeron processors often outperform the much more expensive Intel Pentium II CPUs at the same clock frequency. This is because the Celerons have 128kB of the very fast internal on-die L2 cache running at the clock frequency of the processor, while the Pentium II processors have 512kB L2 cache but running at only half the clock frequency. The comparison graphs below illustrate the difference in performance between the Intel Celeron and Intel Pentium II processors at the same clock frequency. It is obvious from the data presented that the Celeron outperforms the Pentium II at a price often three times less.
Corporate Reference
BTC – Tariffs for
domestic and international telephone, telegraph and cable radio services
and for radio and TV broadcasting (in English):
MATAV – Tariffs in 1999 (in English): http://www.matav.hu/matav-html/istart_e.html
Romtelecom –
Tariff for conversations made by telephone subscribers (in Romanian):
Romtelecom – Tariff
for principal services offered to bodies corporate (in Romanian):
Florida Trade Data Center – CCG Bulgaria, fiscal year 1998: http://www.flatrade.org/ccg/bulgaria.htm
Florida Trade Data Center – CCG Hungary, fiscal year 1998: http://www.flatrade.org/ccg/hungary.htm
Florida Trade Data Center – CCG Romania, fiscal year 1998: http://www.flatrade.org/ccg/romania.htm
Consulco Business Services – Offshore Companies: http://www.consulco.com/index.htm
Manx Offshore Administration – Mauritius Offshore Company Price List: http://mcb.net/manxoffshore/mauopri.htm
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