ASC X12 Insurance Subcommittee

Upward/Downward Compatibility
Telecommunications White Paper


Electronic Data Interchange has been adopted by several industries 
since the early 1980's.  Other industries are just beginning to 
utilize this technology.  The health care industry is in the latter 
category.  The goal in health care is to seamlessly process health 
care information in an electronic environment. Major issues surface 
during implementation of  EDI transactions.  A user base of one-
million for a given transaction presents many concerns. Version 
Control relative to updates/ revisions to the standard for a user 
base of this size is a key issue.   Another issue involves the 
aggressive time frames which may be mandated by federal and/or state 
legislation or required by competitive market forces. These are just 
a sample of the issues facing the health care industry in the attempt 
to fully exploit EDI.

To address these and other pertinent issues an ad-hoc work group was 
formed by  X12N, the Insurance Sub-Committee of X12.  The purpose of 
this ad-hoc group was to analyze the feasibility of massively 
deploying EDI transactions in an industry, addressing such key topics 
as Version Control and Translation Software.  During the analysis it 
soon became apparent that many other factors (areas)  significantly 
influenced  the deployment of standards.  These factors included 
Telecommunications, Implementation Guide Development, Testing and 
Education.  The scope of the group expanded to include these six 
specific areas:


                Translation Software


                Implementation Guides

                Version Control


It also became quite apparent that resolutions/ recommendations for 
these issues would not only benefit the health care industry but may 
benefit other industries as well.  The ad-hoc group  became a special 
task group (Upward/ Downward Compatibility) to X12N.

A series of White Papers was constructed, each paper focusing on one 
of the six topics listed above.  The Telecommunication White Paper 
follows.  The White Papers can be used in conjunction with one 
another to deploy a comprehensive EDI initiative or separately as 
stand alone documents to aid with specific phases of the initiative.  
The documents address the subjects from a business  perspective.  
Some technical areas are discussed.  Other documents of a more 
technical nature should be consulted for  detailed technical 
information and preciseness.  An Executive Summary is provided  in 
the overview to convey the connectivity of the documents for an EDI 

The Upward/ Downward Compatibility Special Task Group wishes you much 
success in your EDI endeavors. We welcome your comments and 
suggestions regarding all or any of the White Papers.  Questions 
regarding specific information in any of the White Papers or other 
implementation issues can be directed to any of the individuals 
listed below.

Debra T. Obringer       Barbara Redding         Bruce Horn
Veritus Inc.                    HCFA/BPO OPOP DPP               The Associated 
Fifth Ave. Place                LOC 1-H-3 Meadows East          6802 Hillsdale 
Suite 621                       6325 Security Blvd.                      Indianapolis, 
IN 46250
Pittsburgh, PA 15222    Baltimore, MD 21207             (317) 692-6154
(412) 255-3111          (410) 786-6151                  (317) 692-6205 fax
(412) 255-5360 fax              (410) 786-4047 fax


These documents were developed by the Upward Downward Compatibility 
Special Task Group of X12N of ASC X12.  Permission is granted to any 
individual or entity to use, duplicate or redistribute this document 
so long as it is not modified or sold for profit.

No warranties.  These documents are distributed in the hope that they 
will be useful in facilitating an EDI/ EC environment.

No author or distributor of this document accepts responsibility for 
the consequences of using it or for whether it serves any particular 
purpose, unless they state so in writing.

The Upward / Downward Compatibility Special Task Group reserves the 
right, and accepts the responsibility, to exclusively facilitate all 
modifications to the data within this document and distribute the 
revised document to any requesting entity.


There are many key elements in an EDI Initiative including but not 
limited to Translation Software, Telecommunication facilities, 
Implementation Guides, Testing, Version Control and Education.  These 
key components can be implemented independently or in conjunction 
with one another,  depending on the business need. 

It is strongly suggested that the  determination of  business needs 
and requirements be the first task in an EDI initiative.  Analysis to 
determine the business needs and requirements must assess the current 
environment as well as those that are anticipated or projected to 
support business goals and objectives.  Once this analysis is 
completed,  any or all of the key components stipulated above can be 
implemented consistent with the business need.  Too often the 
determination of business needs and requirements is overlooked by 
organizations formulating an EDI initiative.  It is critical that, 
this analysis  be the first task.  EDI is not just a technical 
(information system) function but a total business process.  It is 
imperative that both the business and technical components of an 
organization partake in an EDI/EC Initiative.  A critical factor to 
this end is  the level of commitment from executive management.  A 
significant factor in successful EDI/EC Initiatives is the level of 
commitment from the highest levels of executive management within the 
corporation.  The connection between the above stipulated key 
components of an EDI Initiative is illustrated in the Executive 
Summary of the EDI/EC Initiative, which is a compendium of the above 
key components.. 

Special Task Group 2 - Upward/Downward Compatibility developed white 
papers in each of these subject areas..  An Executive Summary and 
Forward prefaces each white paper.  The Executive Summary will 
outline the  scope and recommendation of the respective white paper 
as well as their relationship to an overall EDI Initiative.   This 
particular executive summary and white paper  is specific to 

The scope, recommendation and relationship pertaining to the 
Telecommunication White Paper  is:

Telecommunications relative to EDI is the transmission or  electronic 
exchange of data between business (trading) partners.  The scope of 
this white paper is to address telecommunications from a business 
perspective relative to the establishment of a facility for  inter-
company exchange of information and the deployment of EDI/ EC in an 
industry.  This paper does not address telecommunications from a 
technical perspective but is cognizant of the technical issues as 
they relate to the business.    


 Determine business requirements, goals and objectives for an 
electronic environment.

 Formalize an EDI/EC strategy encompassing telecommunications.

 Special attention should be given to the following areas:

                Education regarding telecommunication.
                Backup/Recovery process and procedures.
                Contingency plans.
                Trading Partner Agreements.

 Monitor costs associated with private/public networks.

 Conduct an evaluation of third party networks on a periodic 

 Utilization of the more commonly used communication protocols.

 Integration of roles to accommodate solution of issues from 
both a business and technical perspective.


Telecommunications augments the exchange process by being the 
transport mechanism for  the  translated information.  Since major 
portions of the testing process require the exchange of information 
between business partners,  validation of the telecommunication 
facility is a pre-requisite to testing.   Implementation guides that 
provide an overview of the entire information exchange process.  They  
address telecommunications from the perspective that the exchange of 
information is subsequent to (outbound transactions)  or  prior to 
(inbound transactions) the translations process. 

Comments and suggestions regarding this white paper are encouraged.  
Questions regarding specific information  or other implementation 
issues can be directed to any of the individuals listed below.

Debra T. Obringer       Barbara Redding         Bruce Horn
Veritus Inc.                    HCFA/BPO OPOP DPP               The Associated 
Fifth Ave. Place                LOC 1-H-3 Meadows East          6802 Hillsdale 
Suite 621                       6325 Security Blvd.                      Indianapolis, 
IN 46250
Pittsburgh, PA 15222    Baltimore, MD 21207             (317) 692-6154
(412) 255-3111          (410) 786-6151                  (317) 692-6205 fax
(412) 255-5360 fax              (410) 786-4047 fax

                  Table of Contents

I.      BACKGROUND                                      C2-C3

II.     CHALLENGE                                       C4

III.    SCOPE AND OBJECTIVE                             C5

IV.     ALTERNATIVES                                    C6-C12

V.      ISSUES                                          C13-C14

VI.     RECOMMENDATION                          C15-C17


Telecommunications relative to Electronic Data Interchange (EDI) is 
responsible for the transmission of the information between the 
business partners. The telecommunications portion of EDI commences 
when the communication initiator establishes a transmission session 
to either send or receive information from other business (trading) 

Telecommunications with EDI generally encompasses two modes of 
communications, direct communications and communications involving 
third party vendors.  With direct communications the sending business 
(trading) partner links directly with the receiving trading partner 
via leased lines (point to point or multi-drop etc.) or direct dial-
up links.  Third party vendors are typically value added networks 
(VANs), value added banks (VABs), clearinghouses, switches, public 
networks such as the Internet, etc..  These entities may act as 
electronic post offices by storing the interchanges that are received 
from the sending business partner and placing the interchange in an 
electronic mailbox for retrieval by the receiving business partner -
or- provide immediate connectivity to the receiving (business) 
trading partner.  Primarily, these third parties act as a conduit for 
the passage of the information.  Some VANs also provide other 
services such as routing, archiving,  data repository functions, data 
conversions, and data validations.  In the health care environment 
Community Health Information Networks (CHINs) and Community Health 
Management Information Systems (CHMIS) are emerging to perform this 
function and in some instances will also act as a repository for this 
information. CHINs and CHMISs are generally regional in nature where 
entities such as clearinghouses and VANs are of a larger geographic 

Initially, many corporations commenced the electronic exchange of 
information with their business partners through one of two means, 
EDI or Electronic Mail (E-Mail).  Standards based EDI is discussed 
above.  E-Mail is a tool that enables the user to electronically 
communicate information that previously required hard copy 
memorandums or telephone calls.  E-Mail initially provided better  
person-to-person internal communications which lead to various types 
of networking scenarios. One of the limitations of E-Mail is the 
necessity for consistent and timely access.  The development of 
networks in support of E-Mail gave companies and employees a facility 
to communicate with each other in conducting business electronically.  
The need to exchange communications in a variety of formats such as 
unstructured text (E-Mail), structured data (EDI), audio and/or video 
(imaging, graphics) using a variety of devices such as computers, 
facsimile machines, bar code scanners, using various modes of 
communication led to the evolution of Electronic Commerce (EC). From 
its beginnings as an intra-company means of communication, EC has 
expanded to encompass inter-company information exchange and inter-
application messaging (EDI-II).  Inter-application messaging allows 
for standardized communications among business partner applications.  
Messaging applications and the technical capabilities of 
telecommunications among business partners exacerbates the need for 
format standards such as ANSI ASC X12 and telecommunications 
protocols such as X.400 (EDI, E-Mail, mailboxing), X.435(EDI, E-Mail, 
Graphics) and X.500 (EDI, E-Mail, Graphics, Bulletin Boards, 
Directory Services). (ASC X12C representatives can be contacted for 
more information on telecommunications protocols.)
Telecommunication technology is considered an important factor 
supporting inter/ intra company messaging today.  In an effort to 
support the distinctive requirements of an industry, corporations are 
building intricate infrastructures which accommodate diverse types of 
information exchanges.  These infrastructures facilitate an attempt 
to gain a competitive advantage concurrent with the ability to 
establish a stable foundation to support business process re-
engineering (BPR) through automated process Workflow analysis.

Graphical interfaces and Client/ Server technologies that support 
business applications such as Computerized Patient Records (CPR), the 
exchange of images and videos and Video-Conferencing have greatly 
increased the demand for telecommunication and network facilities.  
Variations in communication types (direct and dial-up) and all of the 
numerous communication protocols make standards even more critical in 
managing the complexity of telecommunications and increasing 
reliability and integrity.

Messaging infrastructures are proliferating in ability and function.  
Various different forms such as Transaction Networks, Financial 
Networks and Information Networks have been established to address 
information (imaging, video, etc) as well as data needs.  These 
message centers must accommodate EDI transmissions as well.


The challenges confronting industry telecommunication EDI initiatives 
are numerous as well as complex.  When addressing telecommunications 
for EDI, consideration must be given to both Batch and Interactive 
communication processing technologies.  Paramount in this 
consideration must be items such as volume, frequency, timing, 
privacy, confidentiality, and cost.  The issue is not just batch 
versus on-line, or sender verses receiver, but the integration of 
standardized inter-company telecommunication technologies.  This 
leads to ease of use and consistency among industry users.  This is 
particularly significant when mass deployment of EDI transactions in 
an industry is planned or attempted.  Successful incorporation of EDI 
standards not only encompasses issues regarding translation but also 
transmission as well.  Hence, the success of EDI implementations must 
address two areas --- translation and transmission.  Translation acts 
on data to change its form between application and standard (ASC X12, 
EDIFACT) formats.  Transmission acts on data to change its location 
from one trading partner to another via telecommunications, the 
transport vehicle.

The challenge of Electronic Commerce (EC) telecommunications, which 
encompasses EDI, is achieving the inter-company exchange of 
information within a diverse and complex networking schema among 
business partners.  Some corporations experiencing this dilemma have 
addressed the immediate needs of EDI and E-Mail while creating a 
foundation for longer term Electronic Commerce (EC) and Electronic 
Messaging (EM) infrastructures.

These foundations can support future initiatives, while addressing 
present individual strategic telecommunication objectives vital to 
the enterprise.  However, this introduces the opportunity for the 
utilization of various communication protocols.  The complexities in 
interfacing among the various communication protocols must be 
minimized for ease of use and customer satisfaction.  This 
minimization is particularly significant in an environment where mass 
deployment is mandated, legislated, or necessitated by business need.

Open system solutions to the integration of inter/intra company 
telecommunications should alleviate the burden of managing 
connections and information delivery relative to the architectural 


The scope of this white paper is to address telecommunications from a 
business perspective relative to the establishment of inter-company 
exchange of information and the deployment of EDI/ EC in an industry. 
This paper does not address telecommunications from a technical 
perspective but is cognizant of the technical issues as they relate 
to the business. 

The primary objective of telecommunications relative to EDI is to 
transport information between business partners in a cost effective/ 
efficient manner.  Crucial in this objective is the need for "open 
communications" among various business partners.  Telecommunication 
solutions encompassed in an EDI Initiative must communicate easily 
and effortlessly with many if not all business partners.

Essential to the mass deployment of standards is the achievement of 
standardized telecommunications. Any entity desiring to send 
information to another entity can do so in an open, secure 
telecommunications environment.  In other words, "customized" 
telecommunications that restrict an open environment or increases the 
complexities of information exchange should be discouraged.  Complex 
"customized" telecommunications is the antithesis of open, effective 

A critical objective when contemplating and formulating an open 
telecommunications environment is security.  Corporations must insure 
that sensitive information remain assessable to only authorized 
individuals. The physical  infrastructure (architecture) in itself 
can provide a layer of insulation between external trading partners 
and sensitive business application systems.

Another objective is to assure the privacy and confidentiality of the 
information while it is being electronically exchanged. Current 
technologies provide for the encryption and authentication of the 
information.  However, these technologies can be costly and require 
implementation by all involved business partners.


The alternatives that follow outline ways to accomplish the transport 
of ASC X12 formats between business partners.  The relationship 
between the functions of EDI, the application system and the 
communication network is depicted in the various charts in this 
section. Figure 1 depicts layers or levels involved in the inbound 
receipt and interpretation EDI process:

Figure 1:
Layer 1
Telecommunication Network 

Layer 2
Telecommunication Software

Layer 3
EDI Translation Software

Layer 4
Application Systems

The process of generating and communicating EDI data (the outbound 
EDI process) is the reversal of this diagram. The first step becomes 
the application system (the highest level or layer).  This step 
formulates the customized business partner's data.  The EDI 
translation software component converts the application data to a 
standard EDI format.  The telecommunication software initiates the 
communication session, establishes protocol, validates security then 
transmits the EDI data.  The telecommunication network provides the 
medium to connect two or more computer environments.  This outbound 
process can be depicted by adjusting the chart above to:

Figure 2:
Layer 1 Applications Systems 
Layer 2 EDI Translation Software 
Layer 3 Telecommunication Software 
Layer 4 Telecommunication Network 
In some models where the EDI translation software is coupled with the Telecommunication software, layers 2 and 3 combine and become a single layer. (This coupling effect is also discussed in the Translation Software White Paper.) This scenario is depicted as: Figure 3:
Layer 1 Applications Systems 
Layer 2 EDI Translation Software and Telecommunication Software
Layer 3 Telecommunication Network 

Regardless of which alternative is selected by business partners, the 
requirements for a telecommunication environment to support the 
exchange of information should be formulated to support business 
goals and objectives.


Direct communications pertaining to the electronic exchange of 
information between business partners implies that no third party 
entity is involved.  In some instances, the telecommunication link is 
initiated at the sending business partner site and is completed at 
the receiving trading partner site. In other instances, the receiving 
trading partner may initiate the telecommunication link.  In this 
manner, the link is initiated and completed by the receiving trading 
partner.  Various hardware and software options can be utilized in 
the many scenarios that exist in direct telecommunications.  For 
instance, a personal computer can dial up to a mainframe using any of 
the communications software packages (ProComm, Crosstalk to name a 

Another example of direct communications is through leased lines.  In 
this scenario, information is exchanged over lines owned by the 
telephone company and used for trafficking data.  This is different 
than dial-up where a telephone call is initiated and the connection 
is made prior to the transmission of data. Leased lines permit 
continuous communication among the entities involved.  A leased line 
will alleviate "busy signals" that can be acquired in using dial-up 
lines and can avoid conflicts in scheduling the time for the transfer 
of information.  Examples of leased lines are point-to-point and 
multi-drop lines.  There are a number of communication protocols 
(Network Data Mover or CONNECT, X.25, etc)  utilized in leased line 

Examples of direct communications in the health care arena include 
direct lines between providers and payers, dial-up capabilities 
between providers and payers and direct lines or dial-up capabilities 
between institutions.  In an ASC X12 environment, all functions in 
the inbound and outbound diagrams depicted above would be performed 
by each trading partner opting for the direct communications 

Advantages of Direct Communications:

 Direct communications become significant when exchanging 
extremely time critical information or large volumes of data.  
Here direct communications provides the ability to transfer from 
point A (sending business partner) to point B (receiving 
business partner) in the shortest, straightest path possible.

 There is no intermediary through which the data must flow 
before it arrives at the final destination.

 Telecommunication conventions being used on the network should 
be the same as or totally compatible with all others on the 

Limitations of Direct Communications:

 There are multiple communications protocols on the market 
today.  There may be a need to accommodate many communication 
protocols.  However, this is becoming less and less of a problem 
since most companies can now accommodate at least one of the 
more prominent protocols.

 Direct communications may require interface to multiple 
hardware architectures.  For example, IBM mainframes use EBCDIC  
while other forms of hardware use ASCII.  This is of particular 
significance when performing personal computer (PC) to mainframe 

 Direct communications may require continuous computer 
availability.  If the sending business partner sends the data at 
3:00 a.m. the receiving trading partner's computer system must 
be available at that time to receive the data. In dial-up 
scenarios "busy signals" can be encountered, thus causing delays 
and in some instances backlogs.

 Leased lines may be costly.

The decision to utilize direct telecommunications in an EDI/ EC 
environment must take into account the cost and effort involved to 
support this type of telecommunications.  Commitment for funds and 
personnel to support a direct telecommunication environment is 
critical to success.


Private Networks

In some instances, private networks tend to be industry specific.  
The health care industry, for example, has regional or community 
networks known as Community Health Information Networks (CHIN) and 
Community Health Management Information Systems (CHMIS).  These 
networks are just emerging and the utilization of these networks for 
EDI data is just beginning.

Additionally, clearinghouses have been utilized for years as conduits 
in the information flow.  Many clearinghouses also provide value 
added services.  This is illustrated in the health care industry when 
clearinghouses provide billing and accounting services to health care 
providers (physicians, surgeons, dentists, etc).  Many of the 
2,000,000 health care providers utilize clearinghouses.  While not 
all providers use clearinghouses, the providers with small business 
volumes normally will.  Services offered by clearinghouses usually 
are tailored to their customers needs.

The value of the use of clearinghouses in health care is quite 
evident. Clearinghouses generally have a functional area focus, such 
as claims.  However, they often offer extensive services in that 
functional area. Without their role in consolidating claims and 
handling them in bulk to each insurance carrier, the provider would 
have to perform this function.  The result of using clearinghouses is 
the simplification of clerical duties at the provider site and 
accommodating the insurance companies through providing batches of  
records to the insurance carrier. The greater the volume the more 
economical the transmission capability is for the clearinghouse. 
Since there are still more than 400 claim formats in use and since 
there is no convention regarding single ASC X12 version, 
clearinghouses perform many formatting and reformatting tasks. 
Pertaining to the inbound diagrams depicted above, clearinghouses may 
perform functions for all of the layers except application systems as 
depicted in Figures 1 and 2.

Value added banks (VAB) not only serve as conduits for the 
information flow, but as federal depository institutions have the 
capability to electronically transfer funds which is commonly 
referred to as electronic funds transfer (EFT). Services performed by 
VABs are financial.  An example in health care would be the use of 
the claim payment advice (ASC X12 835) to transfer funds.  The ASC 
X12 835 can travel through the banking network (Automated Clearing 
House (ACH)) completing the transfer of funds from the payor to the 
provider while providing the provider of health care services with 
the remittance information in the transaction.  Some VABs offer 
reconciliation services, reconciling the remittance to the EFT.  
Pertaining to the inbound diagrams depicted in Figures 1 and 2, some 
VABs may perform functions in all of the layers.

Public Networks

Public networks can be value added networks (VAN) or networks such as 
the Internet.  Third party networks function as electronic post 
offices and are conduits in the transfer of information between the 
sending and receiving business partners.  When using value added 
networks it is not always necessary for both business partners to 
belong to the same network.

Some of the major value added networks alleviate the limitations of 
direct communications.  For instance, many VANs are available 24 
hours a day, seven days a week, 365/ 366 days a year.  Data from a 
sending business partner may be placed at 3:00 a.m. in a mail box for 
the receiving business partner to retrieve at a convenient time.  
Some VANs also provide value added services such as performing the 
translation of proprietary formats to ASC X12 and vice versa.  Other 
value added services include but are not limited to archiving of data 
and reporting.   

A formal evaluation process should be completed in selecting a third 
party network. The business requirements, goals and objectives for an 
electronic environment must be determined and established to meet the 
needs of the enterprise.  These requirements can be formalized in a 
request for proposal (RFP) or request for information (RFI) document. 
Sample Request for Information for Value Added Services documents, 
for health care, can be obtained from the Health Care Financing 
Administration (HCFA) in Baltimore, MD.  Review of the responses to 
the request for information, initial screening  and formal 
presentations of VANs may be the next steps in the evaluation 
process.  The process culminates with the selection of a VAN.

It is not necessary to obtain the services of third party networks 
for the exchange of information.  Third party networks are typically 
utilized as conduits or stopping places in a telecommunication 
schema.  Companies utilize third party networks based on their 
business needs.  In some network scenarios multiple third party 
networks are utilized.  A cost benefit analysis should be performed 
as one of the factors in the decision making process to determine a 
network architecture to support business goals and objectives.   
As a result of the evolution to the information age, there is an 
emergence of private and public networks that serve in both a 
national and international capacity.  One of the more famous networks 
is the Internet.  These networks have been utilized by business 
partners to transport EDI data.  File transfer, certain electronic 
mail and in some cases browser software can be utilized to send EDI 
data through the network. When using these networks both business 
partners (sending and receiving) must have access to the network.  
This mode of communication is relatively new to the EDI world and 
limitations are just being identified.  One of the more significant 
issues that surfaced is security, confidentiality and privacy.  This 
is illustrated in recent developments regarding the use of the 
Internet in transmitting sensitive information.  Additionally, some 
telephone companies are formulating public networks for information 
flow purposes. 


Depending on the business need some companies employ both direct 
communications and the telecommunication services of a third party 
network.  A company may utilize direct communications to transport 
time critical information and a third party network to transport all 
other information.  Volume is another determinant in the transport 
mechanism.  Business partners that exchange a large volume of data 
may find it advantageous to directly communicate, while utilizing a 
third party network for lower volume traffic. In any case, a cost/ 
benefit analysis should be conducted to determine which 
telecommunication scenario best supports the business need.


Some commercially available EDI translation products (Reference 
Translation Software White Paper) are bundled with transmission 
software.  This bundling provides for both EDI translation and 
transmission in a single product.  Bundled EDI translation and 
transmission packages may be associated with a specific value added 
network as an optional package for purchase, thereby providing an 
"integrated" or "turnkey" package --- translation, transmission and 
value added network.

Several EDI translation software products for personal computers also 
contain transmission software.  This transmission software may 
support direct communications to business partners and/or 
connectivity to value added networks.  A product addressing both 
translation and transmission may have different levels of 
efficiencies relative to the desired business needs.  For instance, 
when evaluated separately the best transmission and translation  
software can be selected, then modularly linked together to establish 
the desired scenario.  However, by definition bundled products 
contain multiple products.  Coupled together these products may or 
may not meet the desired business needs.  In illustrating this point, 
a bundled product may contain the best EDI translation software but 
less than adequate transmission software for a particular business 
need.  Evaluation of all areas of the bundled product becomes 
tremendously important when making prudent business decisions.

V.      ISSUES

- Network functions may not be standardized and are often 
fragmented across industries.

- There is a substantial learning curve involved regarding 
telecommunications for EDI.  Understanding of open 
communications and electronic commerce is essential.

- EDI requirements for a batch, interactive and/ or 
conversational EDI environment are quite diverse.

- There are different (sometimes conflicting)  requirements for 
data/ information needs  as well as multi-media requirements and 

- There are telecommunication protocols (X.400, X.435) that in 
some instances have been customized by a vendor, business 
partner or industry.  Industry wide usage of telecommunication 
protocols is not regulated or sanctioned by a single entity.

- Security, confidentiality and privacy need to be addressed for 
EC/EDI, relative to accessibility to private and public 

- Formulation of complete cost/ benefit analysis process 
regarding telecommunications per EDI business partner must be 

- Development and utilization of a standardized evaluation 
process for third party networks is needed for consistent 

- Formulation of an assessment process in evaluating value added 
services relative to cost and requirements is needed.

- There can be multiple third parties involved in a single 
information exchange.  (Interconnects is an example.) Vendor 
interface and management may be a new venture for some business 

- Rapid deployment of standards will necessitate an increase 
pace of learning and addressing the complexities in 
accommodating a multiple trading partner environment.

- Expansion/ Integration/ Migration of telecommunications for 
EDI with an Electronic Messaging initiative may need to be 
addressed. May require the formulation of a telecommunication 
infrastructure and involve the purchase/ maintenance of 
hardware/ software.

- Business partners may have conflicting transmission/ transport 
approaches/ philosophies and objectives.

-  Use of third party entities as data repositories could cause 
a conflict in business philosophies.

        - Backup/ recovery/ and provisions for retransmission need to be 

        - Volume of transactions in a particular industry (Health Care) 
may preclude use        of certain alternatives because of cost.

        - Support of telecommunications within an EDI environment such 
as the availability     of the necessary documentation for connectivity 
is a concern.

        - Formulation of a standard trading partner agreement is needed.

        - Roles/ responsibilities/ services/ functionalities involve 
both technical and      business perspectives.  Business and technical 
perspectives can no longer be   mutually exclusive.

        - Alternatives and contingencies need to be tested and available 
to  address     telecommunication outages. 


Depending on the business need, one or more of the alternatives 
depicted in the Alternative section may be applicable. Regardless of 
the alternative selected, the following process should be employed:

1) The business requirements, goals and objectives for an 
electronic environment must be determined and established to 
meet the needs of the enterprise.  These requirements can be 
formalized in a request for proposal (RFP) or request for 
information (RFI) document. 

2) An EDI/ EC strategy encompassing telecommunications should be 

3) Tactical implementation plans should be formulated and 
executed.  In the event that third party networks are included 
in the plan, a formal evaluation process similar to the one 
stipulated in Appendix A of the Translation Software White Paper 
should be conducted.

4) Special attention should be given to formal training and 
education, especially if EDI telecommunications is new to a 
corporation or industry.  The traditional on-the-job training 
can result in early mistakes that can be both costly and 
unrecoverable.  Once a certain level of experience/ expertise is 
achieved, networking should occur so as to expand the knowledge 
base within a corporation or industry. 

5) Another area that should be given special attention is the 
backup and recovery process and procedures as well as 
contingencies in the event of an outage.  The telecommunication 
network required by a corporation or industry must be available 
as warranted by business needs and requirements. 
6) As each trading (business) partner is added to the EDI 
environment, a cost/ benefit analysis should be conducted for 
prudent business decision making purposes.  In some instances a 
cost/ benefit analysis per transaction per business partner may 
be warranted.

7) Business (trading) partner agreements should exists between 
business (trading) partners prior to the formal exchange of 
information.  Model business partner or trading partner 
agreements can be obtained from the American Bar Association and 
the Legal and Audit Issues Committee of the Electronic Data 
Interchange Council of Canada.  A trading partner agreement 
model for electronic payments is located in Appendix F of the 
WEDI (Workgroup for Electronic Data Interchange) National 
Implementation Guide for the ASC X12 835 Claim Payment/ Advice 
(Version 3041, release date March 31, 1994).

8) Monitoring of the costs associated with private/ public 

9) In the event that a third party network is utilized, the 
evaluation process should be reviewed on a periodic basis to 
ensure that the most cost efficient/ effective solution is 

Critical to the success of a telecommunication strategy is the ease 
in communicating with business (trading) partners.  Ease of use with 
security, privacy confidentiality and data integrity is essential for 
transporting information among business partners.  The 
telecommunication environment should be "open" to communicate with 
multiple partners but secure enough to assure privacy and 
confidentiality in a cost effective/ efficient environment.  Services 
should be made readily available to be conducive to an EDI or 
electronic business environment.  Companies should utilize the more 
commonly used communication protocols.  This will promote an "ease" 
of communication and "open" environment.  It also provides the 
flexibility to communicate with multiple business partners.

The telecommunication vision of the future can be one of seamless 
interconnectivity between various business partners.  An example of 
this ease of interconnectivity is illustrated in the finance industry 
today.  An individual possessing a Automated Teller Machine (ATM) 
card can transact business at most ATM machine.  The machine at which 
the transaction occurs may or may not be operated by the individual's 
bank. Yet the transaction is processed accordingly because of the 
interconnectivity among the depository financial institutions.   The 
significant savings and customer satisfaction achieved by this 
scenario is quite apparent.  A major factor in allowing this scenario 
to become a reality in other industries is the utilization of few 
communication protocols.  The vision could be one in which business 
entities can easily communicate with each other.  Today, due to the 
proliferation of customized communication protocols there can be many 
technical issues and concerns with connectivity.  Tomorrow's vision  
may be one of a single dominant communication protocol within and 
among industries.  

The overlapping of business and technical issues in the electronic 
environment will necessitate an integration of roles.  In some 
instances there is an intra-company integration of roles.  Issues now 
possess both a business and technical nature.  Solutions to these 
issues require knowledge from both a business and technical 
perspective for the solution.  From an inter-company perspective, 
integration of roles occurs when there is a duplication of 
functionalities or services.  For instance, a VAN may offer data 
repository services that are also offered by another business entity.  
In health care a VAN or clearinghouse can provide the same inquiry 
functionality as a payor.  Questions arise as to the roles, 
responsibilities, services and functionalities being provided at both 
a business and technical perspective.  The resolution to these 
questions/ issues may not only provide for integration but definition 
as well. 

Telecommunications utilizing EDI (as well as EC) is both a launching 
point and a stepping stone toward supporting an industry-wide 
information sharing environment. The vision must include EDI, E-Mail, 
graphics, video and other Electronic Messaging information moving 
effortlessly between networks (public/ private), corporations, 
industries and countries.

Telecommunications White Paper