Rigid requirements of perfect network transfer (i.e., without any loss of data) may be delaying the deployment of picture archiving and communication systems (PACS) and teleradiology. By using a clever and fast packet encoding mechanism to transmit images and then using a four- neighbor interpolation recovery scheme to 'fill in' lost pixels, some packet loss during network transmission may be affordable without affecting the diagnostic quality of the image or influencing the radiologist's diagnostic performance. To test this, radiologists viewed mammographic images with 0%, 15% and 25% transmission loss and reported on the presence or absence of microcalcifications. Observer performance was measured using receiver operating characteristic (ROC) techniques. Diagnostic performance in the 15% loss condition did not differ significantly from performance in the 0% loss condition. 25% transmission loss resulted in a decrease in performance. Thus, up to 15% loss can be tolerated without affecting diagnostic performance. The utilization of loss/performance curves may allow flexibility in network transmission performance requirements, which could ease PACS and teleradiology implementation using current technology.