Alan J. Munn


Alan J. Munn Analysis of

J2  GLOBAL  COMMUNICATIONS,  INC.

doing business as EFAX and JCONNECT (NASD: JCOM)

  1. PREFACE

    This page (which is a companion of our political contribution page) provides opinion. In addition to reading this page, check directly with j2 and with other sources.

    Please send Alan J. Munn a list clearly specifying any factual falsehoods about j2 on this page or anywhere else in any medium.

  2. ANALYSIS

    1. PROFIT

      j2 provides communication services related to fax and email (for example: j2 has fax-email and fax-web gateways, and j2 is paid by advertisers to send advertising by email). J2 gets many of its customers from others' web sites (free search engine listings and paid advertisements). J2 has been in business about a decade, has little or no debt, has rising earnings, has a PE (price/earnings) ratio of 27.20 (as of close of business on 16 October 2007), has never paid a dividend, will not pay a diviidend soon, and has options (calls and puts).

    2. CANCELLATION and CHURN

      Cancellation rate is the percentage of customers who cancel their accounts in a specified period of time (e.g., a fiscal year). Churn rate is the cancellation rate of new customers (for example, people who have been customers fewer than 150 days). At any one time, j2 has a few hundred thousand customers who pay to get gateway service, and several million "subscribers" who get incoming gateway service for free. It was implausibly implied in May 2003 (seemingly by Pacific Growth analyst Joe Noel to Amy Braunschweiger) that many people become j2 customers just before their credit cards expire, thus causing a high churn rate for j2. j2's sales practices, and poor technical support, probably also result in churn. According to j2, its churn is lower than it used to be.

    3. OFFICERS, DIRECTORS, AND HEADQUARTERS

      1. Richard S. Ressler

        Chairman Richard S. Ressler is j2's biggest stock owner. He also has been chairman of a Delaware corporation with Orange county, California, headquarters: (former URL www.maisystems.com) MAI Systems Corporation (OTC BB: MAIY.OB), which seemed to get most of its income from its subsidiary (former URL www.hotelinfosys.com) HIS (Hotel Information Systems, Inc.), a computer services company in Orange county. In 2006, Softbrands bought MAI and merged HIS into Softbrands. According to a proxy notice dated 3 June 2002, Ressler's principal occupation is "President, Orchard Capital Corporation" and his MAI address is care of Orchard Capital at 6922 Hollywood Boulevard (the same building which houses j2's headquarters). Ressler at various times has been CEO and president of MAI, member of a (acccording to information once at URL biz.yahoo.com/e/041001/maiy.ob8-k.html) group ("Investment Group") which is a creditor and stockowner of MAI, co-CEO of cigarette manufacturer Liggett & Myers Tobacco Company, and an officer or director of a few cargo aircraft corporations and their holding companies (Express One International, Inc.; Express One Holdings Corp.; Coreolis Holdings, Inc.; and TradeWinds Holdings, Inc.). Also, Ressler is (or recently was) affiliated with CIM Group and CIM California Urban Real Estate Fund, which acquired or re-developed real esate in the Hollywood neighborhood of Los Angeles city. Those two companies (CIM Group and CIM California Urban Real Estate Fund) are on the ninth floor of 6922 Hollywood Boulevard, the same floor as Orchard Capital and the same building as j2's headquarters. Richard S. Ressler seems to have a wife, Alison Strasburge Ressler, who, as a Sullivan & Cromwell lawyer, has helped companies heavily involved in the computer, Internet, and telecommunications industries (for example: DoCoMo, Ebay, Grass Valley Group, Microsoft, Philips Electronics, and Softbank).

      2. Headquarters

        J2 headquarters and principal place of business are at 6922 Hollywood Boulevard, in the Hollywood neighborhood of Los Angeles city. I guess that j2 is at 6922 Hollywood Boulevard because Orchard Capital Corporation and Ressler are there. j2 may have an office in Santa Barbara California 93111.

      3. MAI

        MAI and its HIS subsidiary, to the extent they still exist, now are part of Softbrands.

        Ressler was not the only link between j2 and MAI. Zohar Loshitzer has been a director of both j2 and MAI. He was a consultant with MAI. He has been chief information officer (which usually means the top computer person) and EVP (executive vice president) for corporate strategy of j2. He has also been a managing director of Orchard Telecom, a telecommunications consulting firm (related to Ressler's Orchard Capital Corporation?). Zohar lives in Los Angeles county. He and Ressler seem to have lived on the same side of the same Beverly Hills block, although not necessarily at the same time.

        William Brian Kretzmer, who might have been born in about 1953, is a director of j2. He was CEO and CFO of MAI. He may have lived in Trabuco Canyon, Orange County, California.

        Incidentally, although j2 and MAI headquarters and principal places of business are in different counties, both corporations held their annual shareholder meetings in the Hollywood Roosevelt Hotel, which is a short walk from the building which houses Orchard Capital Corporation and j2's headquarters. It is interesting and noteworthy that hotel-oriented MAI is linked to j2, which has stated a goal of selling more to hotels.

      4. Officers

        Ressler lives in Beverly Hills, California. Former co-president Scott M. Jarus lives in Manhattan Beach, California. J2 co-president Scott Turicchi, former chief accounting officer (CAO) Greggory Kalvin, and co-president Nehemia and COO "Hemi" Zucker seem to live in the San Fernando Valley of California. Vice president, general counsel, and secretary Jeffrey Daniel "Jeff" Adelman lives in Santa Monica, California. None of those officers (except maybe [mentioned at former URL www.ey.com/global/content.nsf/US/Media_-_Release_-_11-19-05EDC] former officer Janus) lives far from j2's headquarters. Three of them (co-president Turicchi, CAO, and co-president Zucker) live close enough to each other to be able to conveniently meet in each other's homes.

        Kathleen M. Griggs, about 52 in October 2007, is j2's Principal Financial Officer (perhaps also CFO) and Principal Accounting Officer. Many people with these titles are CPAs. We did not find evidece that she is a California CPA.

      5. Directors

        Director Michael P. Schulhof, about age 64 in October 2007, is CEO of Global Technology Investments, LLC., a business in White Plains, Westchester County, New York. J2 director Robert J. Cresci, about 63 in October 2007, has been a Managing Director of Pecks Management Partners Ltd., an investment management business in Manhattan, New York County, New York. Someone with his name and approximate age may have lived in Garrison. New York. Douglas Y. Bech, about age 61 in October 2007, has been Managing Director of Raintree Capital, LLC, a merchant banking business in Houston. Stephen Ross is a j2 director. He used to be a Warner Bros EVP. J2 director John F. "Jack" Rieley is mentioned elsewhere on this page in a brief discussion of how he and Jaye Muller founded j2 with technical help from an Australian software company. Rieley has lived and worked in the Los Angeles area.

    4. POLITICAL CONTRIBUTIONS

      Richard S. Ressler, Alison S. Ressler, and Scott M. Jarus occasionally make political contributions. Richard has been president (Hollywood 90028), realor (Westwood Village 90024), executive (Hollywood 90028), and partner (Westwood Village 90024) of CIM Group; and businessperson (Westwood Village 90024) and principal (Hollywood 90028) of Orchard Capital Corporation. According to government records of Alison S. Ressler's contributions, she has been a businessperson (Westwood Village 90024-3708) of j2 affiliate Orchard Capital Corporation, and an attorney (Beverly Hills 90120) and partner (Hollywood 90028) of Sullivan & Cromwell law firm. All of those zip codes are in or near Los Angeles city.

      Richard contributed to, among others, conservative, Republican, long-shot, gubernatorial candidate Bill Simon's campaign committee; to the Democratic party's central committee for California; and to liberal Democratic candidate Antonio Villaraigosa's mayoral campaign committee.

      Many j2 political contribution details are on a special page of this web site.

    5. INTELLECTUAL PROPERTY and COMPETITION

      j2 owns patents and gets some income from at least one patent. The litigation section of this page describes events in 2006 which may possibly result eventually in cancellation of a few j2 patents. j2's businesses (for example, its email-fax gateway business) do not inherently require patents or difficult-to-get licenses. j2 may use Unix servers, and most of its customers seem to use Windows. There are low barriers to enter j2's industries, especially the outgoing gateway industry (in which email messages from a customer, or files uploaded by a customer to a web site, are converted into outgoing faxes). The incoming fax gateway industry, although cheap to enter, is less cheap (than the outgoing) because the incoming gateway must have at least one fax number per customer.

      It is easy to provide an email-fax or web-fax gateway. The email-fax gateway industry seems especially easy to enter for big email hosts and big ISPs, because they already have many email customers who may appreciate additional service. Outside of the western hemisphere, there already are ISPs and email hosts providing fax-email (and incoming voicemessage-email) gateways to their customers; for example, T-Online. The hope of getting customers this way may be why j2, in early 2004, agreed to have a j2 subsidiary buy all of the assets and operations of Electric Mail, an email-provider in British Columbia, Canada. However, Electric Mail is not yet an important source of paying customers for j2's gateway service, in my opinion.

      Some companies already provide their customers with largely the same fax gateway provided by j2. A few, American, fax gateways with English language web sites are:

      1. Callwave is a fax gateway that possibly may be related to the Fax2Send software mentionned elsewhere on this page.
      2. faxaway by International Telecom is a fax gateway.
      3. According to information once at www.zipteam.com/zipfax/welcome.htm, ZipFax has outgoing gateways (email to fax, and email to postal mail).

      Efax is a British telecommunications business with no connection to j2. The British efax business provides a fax-email gateway.

    6. LITIGATION

      1. securities litigation

        Law firm Stull, Stull & Brody issued a 9 January 2007 press release saying that a court case had begun against j2 Global Communications and some past and present j2 directors and officers for supposedly back-dating stock option grants. At that law firm, Tzivia Brody handles the case.

      2. Nasdaq

        This is about securities trading. We mention the matter here because we guess that it may relate to current or future litigation. On 2 February 2007, j2 filed an SEC form 8-K: Item 3.01 Notice of Delisting or Failure to Satisfy a Continued Listing Rule or Standard; Transfer of Listing. In that notice, j2 declared its intended response to a 30 January 2007 notification j2 had gotten from Nasdaq. That notiifcation largely pertains to the possibility of Nasdaq suspending j2's securities from trading.

      3. patent litigation

        1. introduction

          j2 has been embroiled in patent disputes with some other businesses. Groklaw had a 10 August 2005 article about j2's patent litigation, Patent Infringement Lawsuits That Involve FOSS". FOSS is free and open source software. To learn more about j2 litigation, ask the litigants named below (for example, j2) and their lawyers.

        2. CallWave 2004

          On 24 August 2004, J2 sued CallWave in U.S. federal court in Los Angeles. CallWave filed a statement about this with the SEC on about 27 September 2004. On about 30 December 2004, Callwave agreed to expediting the legal process and claimed that j2's claims were frivolous.

        3. Venali and Protus IP Solutions

          J2 sued Venali in Los Angeles federal court (central district of California) claiming patent infringement by Venali against j2. Venali defended itself in court and also asked the USPTO (U.S. Patent and Trademark Office) for j2 patent reconsideration. Venali wanted to attack, in the USPTO, the patent or patents which allegedly had been infringed. The USPTO granted Venali's first request for reconsideration (in other words, the office agreed to reconsider). There was a 16 May 2005 announcement that Venali filed a second request for the USPTO to rexamine. On 18 May 2005, there was an announcement that the USPTO had granted Venali's request for reexamination of j2 Global's patent 6597688. On about 6 February 2006, Venali announced that

            "... the United States District Court for the Central District of California [L.A. federal court] found that j2's patent litigation against Venali should not go forward pending a decision on whether the patents should have ever been issued.

            "The court questioned openly whether j2's other lawsuits alleging infringement of the same patents should be allowed to continue."

          That severely weakened j2's strategy (as well as we understand that strategy) of attacking competitors with patent infringement litigation. At about the same time that j2 suffered that severe weakening (namely, 2 February 2006), there was an announcement that j2 sued Venali (and Vision Lab Telecommunications, supposedly Venali under a different name) and Protus IP Solutions in L.A. federal court to try to prevent them from sending junk faxes.

          According to information once at URL biz.yahoo.com/ap/060710/venali_lawsuit.html?.v=1,
          on about 10 July 2006, "Venali Inc. said that "... it filed a federal lawsuit against fellow voicemail and fax services provider J2 Global Communications Inc. and Catch Curve Inc., an intellectual property corporation, accusing them of antitrust, trademark and patent violations." That court case is in the Southern District Court of Florida (Miami).

          In late 2006, Venali was bought by a European investment company which supposedly has much money to invest in Venali.

        4. Easytel, Mijanda, and Protus IP Solutions

          On about 4 August 2005, j2 Global announced that it had started (according to former URL www.waff.com/Global/story.asp?S=3688023) patent-infringement court cases against Easytel, Inc. (a subsidiary of InfoUSA, Inc., of Omaha), Mijanda, Inc. (of Canton, Michigan), and Protus IP Solutions (of Ottawa, Canada).

          Mijanda, sued in U.S. District Court for the Central District of California (L.A. federal court) in case CV 05-5300 (filed 5 August 2005), made a patent license agreement with Catch Curve (j2's patent licensing agent) on about 1 December 2005. Because of Venali's victory against j2 in L.A. federal court in early 2006, other j2 competitors may be unlikely to enter into agreements (similar to Mijanda's) with j2's agent.

          Orrick law firm's Robert A. Cole is in charge of defending Protus IP Solutions in the federal court case j2 started against Protus (J2 Global Communications et al. v. Protus) in the Central District of California. That case may involve eight patents. Protus may enjoy the same victory that Venali did and for the same, basic reason. On about 2 February 2006, j2 sued Protus for supposedly sending junk faxes. That suit is mentioned a few paragraphs above on this page, in the Venali discussion.

      4. lawyer

        To better understand the litigation mentioned on this page, you may wish to confer with a lawyer.

    7. COMPETITION TO THE GATEWAY INDUSTRY

      The entire fax gateway industry (in other words, companies which provide fax gateway service to their customers) is threatened by software and hardware (especially by inexpensive computer programs) which make fax gateways unnecessary. Imitation fax (in other words, virtual fax) service is the sum of two, distinct services: incoming and outgoing. Incoming service consists of converting an incoming fax (which is sent in tiff format, by the way) to a graphics file, which is then attached to an email message, which is then sent to the customer. This service often can be replaced by a computer program which enables the customer's personal computer to convert the incoming fax to a graphics file, which he can then see in his computer. The outgoing gateway service often is in two forms: email and web. An outgoing email gateway service converts the customer's outgoing email message into a fax which is then sent to the fax recipient. An outgoing web gateway usually allows the customer to upload a graphics file (or text message) to the gateway's Web site using a form on a web page, and the gateway company converts the uploaded file or text message to a fax which is sent to the fax recipient. These two fax services (imcoming and outgoing) can be done by a computer program or card in a computer. In other words, there is hardware and software which makes a computer into a fax server. This hardware and software (especially low-cost computer programs) are an excellent alternative to gateway providers such as j2. If the programs and cards become popular enough, much of the gateway industry will be annihilated. Some of these fax programs and cards are:

      1. 4-Sight FAX by Soft Solutions is a software fax server for Mac OS X and Windows PCs.
      2. 32bit Fax by ElectraSoft for Windows. There are millions of users of ElectraSoft software.
      3. Fax2Send is multilingual, client-server software for Linux and Solaris. Fax2Send is made by the U.K.'s Beacon Computer Services, which is a trading name of Caneline Ltd. Fax2Send may possibly be related to the faxwave gateway described elsewhere on this page. Fax2Send should not be confused with j2's Send2Fax.
      4. GFI FAXmaker is fax server software for non-tiny users. It can be used as a gateway which allows users to send and receive faxes and SMS/text messages directly from their email clients. GFI's Web site is in a few languages (for example, English, French, Italian, and Spanish).
      5. According to information once at www.hylafax.org/faxgateway.html,
        HylaFax software is a fax server (enabling users to send and receive faxes) and a simple, outgoing, email-to-fax gateway. It has at least one Usenet newsgroup, fa.hylafax, through which HylaFax users can directly help each other.
      6. list of Windows fax server solutions is a list of links to web sites which sell software and hardware fax servers for Windows. (A fax server enables a computer to do the work a fax machine does.)
      7. Mighty Fax by RKS is a low-priced, fax-server program for Windows.
      8. NetFax by NRG is a CGI, web-to-fax gateway for Macintosh. It parses web form data and faxes the results.
      9. phone-soft has a list of links to web sites selling a wide variety of fax servers and fax gateways for Macintosh, Unix, Windows, and other platofrms.
      10. Pigeon Mail'n'Fax low price, for Windows, multilingual program
      11. Venali sells software fax servers for non-tiny users of Windows.
      12. Winfax Pro program, which is for small businesses, sends and receives faxes, and forwards faxes as email attachments (which seems to make it a fax-to-email gateway).
      13. Zetafax by DEK seems intended for non-tiny enterprises.

      Incidentally, some hardware and software now on the market enable the user to be a gateway for paying customers, thus competing with j2 and other gateway companies.

      The IETF (Internet Engineering Task Force) Internet Fax Working Group may help you keep abreast of changing Internet fax technology.

    8. SERVICE QUALITY

      J2 provides poor technical support to its gateway customers. A j2 technical support experience was evaluated on 12 August 2003 in Usenet Message-ID: telecom22.609.12@telecom-digest.org (Subject: Re: Anybody Know About J2.com's Email-by-Phone Reliability?). The quality of service a gateway customer gets consists of far more than technical support. In my opinion, there have been many, credible reports on the Web that describe (for example, at former URL www.ripoffreport.com/results.asp?submit22=Search+All+The+Latest+Rip-Off+Reports+Now%21&q1=ALL&q2=&q3=&q4=&q5=J2&q6=&q7=&searchtype=0) j2's billing is unethical. For example, according to reports by Patricia (2006), Micah (2006), and surprise (2005) to ripoffreport.com, j2's Bombay billing center personnel speak English poorly and provide terrible, unethical service. In my opinion, there is much evidence that j2's policy is to never pay a refund even when j2 clearly owes a refund. I am not aware of any fax gateway in America that provides worse service to its paying customers than j2 does.

      Faxbeep.com and eFax Sucks ("the diary of hurtz") have anecdotes about eFax and j2 service.

      You may wish toi confer directly with j2 about these and other matters.

    9. SPAM

      j2 sends spam (which is a kind of email).

      j2 sends much email which contains commercial advertising. j2's spam is generally worse than most spam because j2's spam is much bigger per average message (because many j2 email messages contain a graphics file; for example, a tiff file). The spam, and also the included graphics files, often contain untrue statements.

      j2 sometimes sends email which falsely says that someone sent the email recipient a fax.

      j2 earns money sending email which contains commercial advertising. j2 has a conflict of interest between its duties to its advertisement-sending customers and its duties to its advertisement-receiving customers, because the former send advertisements (by email) to the latter. j2 sends spam on routes involving jurisdictions in which spam is illegal.

      A spammer must tell spam recipients his contact information (to enable the recipients to buy what he is selling, for example). This contact information (for example: telephone number, fax number, email address, web page) is called a drop box. Most ISPs and web email hosts do not allow their services to be used as a spammers' drop box. j2 allowed its customers' accounts (for example, virtual fax numbers and virtual voice mail telephone numbers) to be used as spammers' drop boxes. Read the email message to Mr. Parker "setting our policy" (posted in 2000 as usenet Message-ID: <8idclc$n56$1@nnrp1.deja.com>#1/1). Here is a copy of spam sent in 2002 for which the drop boxes were web pages hosted by j2.

      The vast majority of j2 gateway users never pay j2. j2 is paid by advertisers to send email advertisements (which are sent to non-poying users of j2 gateway services, and to other recipients). Investors who want to invest in the email adveritising industry (selling short or going long) should consider Nasdaq-listed j2's stock and options. Advertising revenue is an important part of j2's revenue.

    10. HARD TO SAY GOOD-BY

      j2 web sites have made it unreasonably difficult to stop being a customer of j2's internet fax services. For example (on 14 April 2003), the instructions to cancel the account are often unreasonably difficult to find and unreasonably difficult to follow. Even when the instructions to cancel the account were followed perfectly, and even when j2 has been informed and actually knows that the customer cancelled the account, j2 has simply asserted that there is an account. Read the "can't unsubscribe" Usenet thread (beginning with the message with Message-ID: <3b02bbd8.80878790@news.teleport.com>) for a 2001 example of trying to leave j2.

    11. SPAM OPT-OUT

      j2 has often disregarded its ostensible opt-out feature, and often disregarded demands that it stop sending spam. J2, which sends email, ignores email notice that it should stop sending email. Although j2 sends email, it ignores opt-out notices and unsubscribe notices sent by email.

      Advertisers pay j2 to send advertising email to j2's free "subscribers". Therefore, j2 often disregartds notices from free "subscribers" to opt-out of free service. Just as people should be warned that cigarettes are often addictive, people should be warned that j2's free incoming gateway service and advertising email often cannot be cancelled or opted out of.

      j2 sends spam.

    12. SECURITY and RE-USE OF FAX NUMBERS

      When a person who has a fax machine stops using his fax number, the phone company assigns the number to someone else, who usually does not use it for faxes. Thus, the number stops being a fax number. Therefore, it usually is impossible to send a fax to the number after the telephone company gives the number to a new user. Therefore, if someone tries to send a fax to a number after the telephone company gives the number to a new user, the fax probably will not be be read by the new user of that number.

      j2 has stated that it plans to re-use the fax numbers it assigns to customers. When a customer leaves, j2 will let a different customer use the fax number, j2 says. This creates a possible privacy problem because the new j2 customer would get and then might read faxes intended for the former customer. It is possible that breach of virtual fax privacy might lead to court cases, especially if j2 fails to genuinely warn about the privacy problems to customers with an obviously high need for privacy, such as law firms and medical service providers.

      Furthermore, there is a separate privacy problem because virtual faxes (which are a kind of email) are inherently less private than true faxes. When j2 sends a virtual fax email message to a j2 customer's email account, that message may be read by many Internet companies' employees (for example, employees of the recipient's ISP). For a variety of reasons, real faxes are more resistant to snooping than virtual faxes are.

      In general in the imitation fax industry, (not just for j2), there is an important question of how customers should get the graphics file that the incoming fax has been converted to. There used to be fax-to-web gateway services for incoming faxes. Each incoming fax would be converted into a web page. A gateway customer would log into his account at the gateway's web site, then look at web pages which his incoming faxes had been converted to. I am under the impression, which may be wrong, that there were too many problems caused by crackers reading other people's imitation faxes (in other words, web pages that other people's incoming faxes had been converted to). Now, the preferred system is to send the file to the customer as an attachment to an email message. Soon after the previous sentences in this paragraph were added to this webpage, j2 announced that it has started a (according to information once atURL biz.yahoo.com/prnews/041025/lam089_1.html) new service: j2 customers can now read their incoming faxes as web pages. That new policy seems to be the direct result of this web page.

      Los Angeles city, where j2 has its headquarters and principal place of business, may be an excellent place for a plaintiff to start a privacy court case against a business.

      A related problem is unwanted faxes (not necessarily junk faxes). Imagine that a j2 customer often gets faxes that he wants (and that are not necessarily junk faxes). For example, a j2 customer might often gets non-junk faxes about breeding and selling dogs. Later, when he stops being a j2 customer, his fax number might be given by j2 to a new j2 customer. The new customer may not want faxes intended for the former customer (for example, faxes about breeding and selling dogs). However, that second customer might get many non-junk faxes about astrology. Later, the fax number may be given to a stilll newer j2 customer, who may get some faxes intended for the two previous j2 customers. The more customers who use a j2 fax number, the worse the problem (of unwanted faxes) will get, especially if junk faxes are sent. Although this may not be a big problem for a young company that operates a fax-email gateway, the longer j2 will be in business, the less value a j2 fax number will be (because of the increasingly high proportion of incoming faxes that will be unwanted). Therefore, value of j2 fax numbers to potential customers should decline to the extent that j2 re-uses fax numbers. This may eventually affect j2's income and, thus, its stock price.

      There are businesses that earn money sending junk faxes. Those businesses want to know as many fax numbers as possible, to send junk faxes to those numbers. Therefore, those businesses may try to get a list of all of j2's customers' fax numbers. To the extent that the list of j2 customers' fax numbers is acquired by senders of junk faxes, j2's fax-email gateway service may become less valuable to j2's customers, thus reducing j2's income. There are a few, widely known ways that a sender of junk faxes can find out j2's fax numbers. One way is by war dialing (using a computer to systematically call many phone numbers to see if they respond with a fax tone). Another widely known technique is to illegally get the information from employees (j2 employees or maybe phone company employtees). To save money, j2 probably buys sets of consecutive telephone numbers (cheaper than getting non-consecutive phone numbers). Thus, discovering one j2 fax number probably is a clue to what others are.

    13. J2'S RULES FOR CUSTOMERS

      The rules mentionned below have appeared, in, among other places, the j2 Web site in a pop-up entitled "Customer Agreement -- eFax Plus", in j2's "Legal Agreement -- eFax Plus", and in efax Customer Agreement (which is reached by clicking "Terms of Use" on the bottom of a j2 web page).

      j2's paying customers are forbidden to opt into junk fax lists (in other words, the customers are forbidden to request to get junk faxes). This rule is bad for those j2 customers who want to get some kinds of junk fax.

      If a person receives spam that he does not want, most experts advise him not to try to opt out, because opting out teaches malicious senders of spam that someone reads email sent to that address. However, j2 requires customers to contact the sender to try to opt out. This j2 rule probably is bad for j2 customers who get unwanted spam virtual faxes (a kind of email).

      According to contracts j2 has with its custoemrs, j2 has the right to block any incoming fax which j2 considers spam. j2 may block any incoming fax without telling a paying customer that the fax was sent to him (or that j2 blocked it) if j2 decides that the fax is spam. Some people and businesses might not become j2 customers if they knew about this rule.

    14. THE FOUNDING FATHERS: MULLER AND RIELEY

      What do the "j" and "2" mean in "j2"? J2 originally was Jfax. Maybe Jfax was understood to be j1. Jfax was co-founded by Jaye Muller. The name "Jaye" (and maybe also the "J" in "Jack") probably explain the "J" in Jfax and j2.

      John "Jack" Rieley and Jaye Muller seem to have realized the need to somehow use the Internet to help people who were traveling and therefore not receiving faxes. Muller decided that the service should be built around email. According to a 23 September 1996 New York Times article entitled "German Pop Singer Sets Sights on Virtual Office", an Australian telecommunications software development team helped Muller and Rieley create Jfax. Muller, who had been born and raised in East Germany, seems to have been Jfax's first (according to information once at www.jbonja.com/jfax/j_forum/biog.htm) president and Rieley seems to have been its first chairman. (By the way, Rieley had managed the Beach Boys in the 1970s and had been a radio disk jockey.) In Jfax's early days, president Muller sometimes wore orange pants, the J. Forum advised people to (according to information once at www.jbonja.com/jfax/j_forum/qa.htm) "go ahaad, blow their minds", Jfax claimed to provide a jumpstart to the future, Jfax was praised by Scientific American, and Jfax was on Fortune's list of (according to information once at www.jbonja.com/jfax/press_buzz.html#fortune) 25 cool companies. Muller is no longer an officer or director of j2. J2's glory days ended when Muller left. The Australian software company did not do any work for j2 after Muller left, as far as I know. John "Jack" Rieley is no longer a j2 officer but is still a j2 director.

      Muller is a musician, singer, and song-writer. In America, he seems to have lived in downtown Manhattan and the Brattleboro area of Vermont. Muller also started Boardrush, Inc., which he still is with, and which is related to Flasher Factory, according to information once at URL flasher.com/main.htm. Reilly (as administrative and technical contact for boardrush.com) and Muller (as contact for jayemuller.com) have street addresses in the same, Manhattan building which houses Flasher Factory. Incidentally, "Jaye" is unusual for a German, first name. Maybe "Jaye" is a nickname or maybe Muller changed his first name to Jaye.

    15. LACK OF DISCLOSURE

      j2's lack of complete disclosure of its activities and contract provisions might be construed as not entirely proper. j2 documents filed with the government may not fully disclose everything about j2 (for example, how j2 has been getting and keeping customers and "subscribers"). j2 may not be fully disclosing how many customers and "subscribers" j2 has.

    16. CONCLUSIONS

      An imitation fax (which is what a virtual fax is) is often better than no fax at all. j2 appeals chiefly to people who have an Internet connection, do not have a fax machine, and are willing to pay a little for imitation faxes. In the fax gateway industry, the chief challenge is to get customers, not to provide the service. There is a big, marketing advantage to companies that already have many email customers (big ISPs, for example). Although it is not expensive to start providing email-fax gateway service, a company that wants to provide such service might decide to buy an existing gateway provider. If the j2 experiment has a happy ending for its stockholders, that ending may be that j2 will be bought out. A few challenges faced by j2 are:

      1. Although j2 has been in business about a decade, j2 has a price/earnigns ratio over 20, has never paid a dividend, and won't pay one soon.
      2. Many companies in many countries can easily provide services now provided by j2, some already do, and more probably will. Barriers to entry are low in this industry.
      3. Much of the gateway industry (not just j2) may be destroyed by a rise in popularity of hardware and software (espcially inexpensive computer programs) which enable pc-users and other computer-users to easily send and receive faxes without a gateway service. The fax gateway industry may gradually get smaller as people learn to use their computers as fax machines.
      4. Fax gateway service is either part of a much bigger business (for example, an ISP) or it is a business's core activity (for example, j2). I have never heard of dividends being paid by a business whose core activity was providing a fax gateway.

  3. RELATED MATERIAL

    LINKS


    J2 BRANDS
    Documagix, eFax (a brand of eFax, which seems to be owned or controlled by j2), Email-By-Phone, Filing Central, Hotsend, j2 Global Communications, jConference, jConnect, jBlast (fax broadcast), Jfax, jSource, jTalk, Microviewer, PaperMaster, Protofax, Richimage, Send2Fax (which should not be confused with Fax2Send, made by the U.K.'s Beacon Computer Services, which is a trading name of Caneline Ltd), Timeshift, Websend

    J2 TELEPHONE NUMBERS
    1-323-860-9200 (headquarters)
    1-888-438-5329 (headquarters) toll free
    1-800-251-5212 (investment information) toll free
    1-800-718-2000 (sales) toll free
    1-800-958-2983 (sales) toll free
    1-800-362-8624 (DocuMagix Inc, CA, Personal Content Management) toll free
    1-800-552-8352 (J2 Telcom, CT) toll free
    1-800-541-8447 (J2 Wholesale Distributors, CA, Computer Supplies) toll free
    1-888-438-5329 (JFAX Personal Telecom, NY, Internet) toll free
    1-415-218-4872 (ip tech)

    EMAIL ADDRESSES
    affiliates@mail.j2.com, investor@j2.com, investorinfo@j2.com, jadelman@j2.com (Jeff Adelman at j2 headquarters), press@j2.com, press@j2global.com, r.karpman@socketmedia.com and info@socketmedia.com (media relations and investor relations for j2), ekahn@ekms.com (licensing agent for j2's patents), ipadmin@j2.com (ip tech), Josh.Evans@j2global.com (Joshua Evans, Director Business Development), MPugh@j2.com (Mike Pugh, VP of Marketing).


    URLs

      j2.com, www.j2.com, jfax.com, jconnect.com, www.jconnect.com, documagix.com, efax.com, www.efax.com, www.efaxcorporate.com. hotsend.com, www.j2global.com, www.fax4free.com

  4. IMPORTANT NOTICE ABOUT NAMES

    This web page is about the j2 Global Communications business which is a Delaware corporation with S.E.C. number 0-25965 and I.R.S. employer identification number 51-0371142.

    1. Efax is a British telecommunications business unrelated to j2. The British efax business provides fax-email and voice-email gateways, discount telephone service, Internet domain registration, web hosting, and other servides. This web page is about America's j2 Global Communications company (including its eFax brand), not the British efax company.
    2. JCOM is j2's Nasdaq abbreviation. JCOM also is the short name of a Japanese communications business unrelated to j2. This page is not about the Japanese JCOM.
    3. j2 Global Communications (discussed above on this page) is unrelated to the business once known as J2 Communications corporation, which did not have "Global" in its name, used an upper case "J" in its name, was listed on NASDAQ as JTWO until 24 March 2002, is now an OTCBB corporation listed as NLPN.OB, provides humor and other entertainment through the Internet and other media, is widely known as National Lampoon, and is named National Lampoon Inc (California). Both businesses (the "j2 Global Communications" virtual fax business, and the business once named "J2 Communications") are in Los Angeles.
    4. jConnect is Sybase's high-performance JDBC driver. (A driver is a kind of computer program.) This web page is about j2's jConnect, not Sybase's jConnect.
    5. According to information once at www.dbsr.duke.edu/research/softwaredev/libraries/java/jblast/default.aspx, JBlast is a Java library, queue implementation, and some utilities. It was created for research, not commercial, use and is described at Duke University's website. J2 has a jBlast brand. This web page concerns j2's jBlast, not the software described at Duke University's website.


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