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David, Christoph, thank you everybody for help. I got HylaFAX running with outstanding quality, hardware flow control and 2D. The problem was in /dev/modem used as symbolic link to ttyS0. What confused me significantly is that etc/config.ttyS0 was never actually used, so somehow HylaFAX was getting default parameters and did not report anywhere that actual config is missing. Summary: /dev/modem should not be used anywhere during installation. I'll try to communicate this to Red Hat HylaFAX HOWTO (which is a bit misleading :). Thank you again, Michael Kremliovsky