From the July 1997 issue of Entrepreneur

The world is getting smaller--or at least office equipment is. Thanks to the newest technology, you can replace that bulky fax machine and space-stealing answering machine with one neat, inexpensive little unit called a multifunctional modem, with prices ranging from $70 to $379.

Designed to transmit files and faxes, connect you to the Internet, and serve as answering machines that support caller I.D. and call-waiting, today's modems also serve as hands-free, speed-dial telephones, accepting and storing incoming calls in voice-mail boxes--all directly from your computer.

Modems transmit files, or data, to another computer faster than they transmit faxes to a fax machine. Data can be opened as a document and edited on a receiving computer--useful if you're on the road with a laptop and need a file from your office computer. High-speed modems allow you to quickly download graphics-heavy Web pages, lowering phone costs. You can also decrease your phone bill by buying a modem that lets you schedule fax transmissions when rates are least expensive.

A few multifunctional modems let you talk and send data at the same time so you can share and discuss documents on screen simultaneously. Some are equipped with built-in speakers, headsets and microphones, while others use the audio function on multimedia PCs. The modems' support software is responsible for these features and can be customized to your specific business needs.

Before shopping for a modem, know your computer's operating system, configuration and applications to ensure compatibility. To run a multifunctional modem, you'll need a computer with at least 4MB RAM and Windows 3.1 or higher if you're using a PC. You'll also need a hard drive with at least 4MB available and, for some units, a floppy disk slot or a CD-ROM drive.

Your computer should be at least a 386; some modems work only with a 486 or higher. The newest modems are compatible with all Windows programs, MS-DOS and Macintosh systems, and are sold with communications support software.

Whether to buy an internal or more expensive external version is mostly a matter of convenience. If you need to unplug and use your modem with another computer, the external model fits the bill.

Here's a list of features to look for when shopping for a multifunctional modem:

Simultaneous voice and data (SVD)anddigital simultaneous voice and data (DSVD): SVD allows you to speak on the telephone and, at the same time, transfer data to the other caller's computer while you both view the same documents. DSVD compresses voice transmissions digitally so they can be processed much faster than analog, or noncompressed, technology.

Kbps (Kilobits per second): This measures modem speed--how fast data is transmitted from your computer to another computer or connects to online services. It also measures how fast your modem transmits to a fax machine.

Full-duplex speakerphone: Full-duplex speakerphones provide higher quality, echo-free talk, allowing parties on both ends of the conversation to be heard more clearly. Half-duplex speakerphones transmit in one direction only.

Volume control: Quieting an incoming telephone call on your modem's speakerphone provides privacy. Some modems' software allows you to lower the sound on screen using your mouse or pointing device.

Videoconferencing: If you have a video camera, video support, a PC sound card and appropriate software, a handful of the new modems are equipped to support videoconferencing.

Caller I.D.: This call-screening feature can be used only if your phone company provides caller I.D. service.

Background mode: This enables calls to be answered and recorded onto your computer modem's answering machine even if you are using the computer to work on a document.

Plug and play: This feature simplifies installation. It allows users to plug in the modem and almost instantly start using it, assuming your computer system has Windows 95 or a similar application to install the necessary modem drivers with minimal user intervention.

Voice mail: A built-in answering machine system, voice mail sorts and drops audio messages into individual mailboxes on your computer. Some modems offer password protection for privacy, remote retrieval, instant message review and individual greeting messages. A few models even forward a notification to your pager.

Broadcast faxing: This feature enables the sender to fax documents to multiple numbers with a single computer command.

Lightning protection: The number-one cause of modem failure, according to industry experts, is lightning striking telephone lines, causing surges and disruptions in phone service. Rare as it sounds, this weather condition is, in fact, far more frequent than most people believe. One of your best bets against this phenomenon is a modem with a circuit that diffuses lightning surges.