
Apply HN: IXD – Universal Broker for Legacy Communications Systems - farmdog
The fax market is still growing by around 10% a year in terms of usage and revenue.  Hospitals, insurance, banks, lawyers, and government all rely on fax as a universal form of communication between their systems when they send significant amounts of sensitive information with other entities in an automated way.<p>This is crazy.<p>IXD aims to replace fax and other legacy communications technology with 15 minutes worth of changes to their infrastructure.  Companies like DocuSign don&#x27;t focus on bulk transmission of data, and no other solution out there really provides the universal connectivity fax provides.  And e-mail is simply not secure.  GPG is too hard to use or isn&#x27;t auditable, so companies stick with what works for them<p>We&#x27;re working on clients, proxies, and APIs that pull data from legacy systems and understand fax protocols, and send them through our servers, where we then can relay that data to its destination in a secure way.  Then the receiver can choose how they want to receive those documents:  via fax servers, e-mail, a Web page, into their database, or in a network folder, for example.  Imagine sending a document to a government agency without needing to find a fax machine, all while the agency keeps their fax machines in place and receives your document the way they are used to.<p>In the long-run, we want to enable large enterprises that deal with compliance standards to use faster, more modern technology to communicate with each other so each company chooses how they want to receive information such as documents or medical images, for instance.  This means connecting different communications services:  Like Dropbox to ShareFile; or DocuSign to SharePoint.  No longer do people have to use the system the sender used to send information:  Everyone can use the service they are comfortable with, and more importantly, have audit records in.
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trusheim
Quick questions: Is the fax market really growing at 10%+ per year? Who are
the customers and how large is that market? Why are those customers "left
behind" from the wave of innovation that transmits more and more data
electronically?

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farmdog
Is fax really growing?: My background is real-time communications (voip,
video, messaging) so this was not intuitive for me. eFax's latest quarterly
report indicates they grew their fax division by 5%; the hospitals many of our
partners server have growth at 15-20% in terms of revenue and usage. In fact,
our partners tell us this past year was their best in the past 20 both in
terms of revenue and usage. Anecdotally, one hospital network we just talked
to does it in house and is increasing the number of phone lines to their
servers from 64 to 144. But the real source for this number is from Davidson
Consulting's annual fax report:
[http://davidsonconsultinginc.com](http://davidsonconsultinginc.com). Relevant
summary is at [https://www.biscom.com/blog/fax-server-industry-news-from-
da...](https://www.biscom.com/blog/fax-server-industry-news-from-davidson-
consulting/). They cite 9.4% growth; our number comes from our focus on
healthcare where we source from our partners' growth, as well.

Who are the Customers/Market Size: We are focusing on healthcare because they
have strong incentive to send data faster, but key segments also include
legal, government, insurance, and finance/banks. The main driver for them is
compliance (HIPAA, Sarbanes-Oxley, FINRA regulations, etc) that effectively
require companies to secure their communications and keep an audit trail of
access/communications. Audit trail and interoperability are the main reasons
companies keep fax around because it's a least common denominator when it
comes to communications. The entire secure document collaboration market
(including SharePoint and Dropbox) is around US$11.5B right now; the fax
market is $5B of that. Telephone costs are $1.3B of that.

Why are these customers left behind: 1: It's hard to completely change out a
huge system that is transmitting millions of pages of data every day and many
secure document products like DocuSign aren't designed to send at scale like
some of the banks use (eg, one bank does 40M pages/month).

2: Beyond the phone number system, there's no universal registrar for contact
information for each company. So if company A wants to send something to
company B, and both are highly regulated, if company A uses Dropbox and
company B uses SharePoint for their audit trail, then how do the two talk to
each other? Fax is universal and has a well-known protocol/lookup system and
it keeps their audit trail in one place. It's just old, slow, and expensive
(but cheaper than building custom integrations between every sender and
receiver). I'll bet most people have experience receiving secure documents or
signing with at least 10 different systems. If you had to receive more than
1000 documents a month, it would be really hard to do that with 10 different
systems: You'd want to just use one, especially for record keeping.

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asantiago
Based on a 10% grow year to year is there some information on what will be the
cost savings for those companies when adopting this system?

~~~
farmdog
Effectively, these companies either pay someone to host a fax service with
copper (not IP) phone lines or do that on their own with a fax server and a
number of phone lines depending on how much they are sending/receiving. They
spend on IT to manage their operations, server and licensing fees for the fax
software, hardware (fax boards or phone gateway routers), and phone lines. The
lowest cost we've seen at scale a bank that sends 40M pages per month and
spends about 1.5 US cents per page. All costs in this market are tied to page.
That ends up being around $600/GB of data.

Cost to us is a fraction of the cost because we rely on the Internet, but fax
users care more about speed and error rates. Today, fax takes best case
45s/page (this is at 33.6 kbps), but there are errors and retransmissions that
slow this down. Our solution knows how to get data from the fax servers and
back-end applications faster than fax speed on the order of 10-100mbps, so our
value proposition is that we speed up their infrastructure and replace phone
lines. To help us grow, we charge them about 50% of their telephone line costs
because those lines are no longer needed. So in short, the major value is the
speed and error rate reduction, so significant cost cuts are not necessary,
but helpful for growth.

