Hosted solutions are hot right now.  Just like cereals, soaps and shampoos always have to come out with new and improved versions of their products, so too do technology companies.

The latest is “hosted” solutions.  Hosted or cloud computing and hosted VoIP telephony services are being touted as the best thing since sliced bread.

From a telephony perspective, I find it interesting because the concept of a hosting in the telephony world is not new.  The phone company has been offering Centrex service for decades, in fact they still do. With Centrex, customers would in essence, rent space in the Central office PBX.  Each user would have their own 10 digit telephone number that would ring directly on their telephone.  Users could “intercom” each other by dialing the last 4 digits of the desired telephone number in the network.  Calls could even be transferred to off-site locations.

In its day Centrex was quite advanced.  It offered features that were not available anywhere else.  However, it did come at a cost.  Like hosted VoIP, Centrex was basically a rental.  Each telephone number cost subscribers a monthly fee and did not include long distance toll charges, which back then were quite significant.

On the plus side, there was no equipment on-site, which in theearly days of PBX’s took up quite a bit of space and required significant air conditioning and electricity to operate.  But, a small company with say 20 to 40 employees would spend the equivalent of a new phone system every few years for the cost of Centrex service. 

With the advent of digital PBX telephone systems, however, with their small footprint, built-in features and lower operating costs the Centrex model of a telephone number for each employee didn’t seem to make sense.

That brings me back to hosted VoIP service.  It is basically Centrex over the Internet.  In my opinion, the economic model is the same, a monthly rental for equipment and now included telephone service for each employee.  However, on-site digital PBX equipment can offer the same or more features, with significantly lower operating costs.

But to me, the biggest misconception is the implementation of hosted VoIP over existing Internet connections.  There are some companies claiming to save users thousands of dollars a year by using their existing broadband Internet connection to also provide hosted VoIP service.

Remember the old adage: “If it seems too good to be true….. it probably is”.  In my opinion, hosted VoIP service should be delivered over a dedicated T1, use quality routers from name manufacturers, have quality IP phones, not low cost knock offs and have a hosting company that can prove redundant capability and offer quality support staff.

Telephones are a mission critical system to any business. Yes, we all want to save money wherever possible. But when there is a problem with the telephone, the savings seem less important.  So, save money prudently, not foolishly.

There is a lot of buzz these days about cloud computing and virtual PBX systems for businesses.

Virtual or hosted telephone systems market themselves as a better alternative to traditional PBX systems located on the customer premises.  They tout advantages such as protection against obsolescence, software upgrades, connecting remote locations, and included maintenance and phone services.

But I would not count out the traditional PBX systems just yet.  If you have a home office or require less than 5 or 10 telephone sets or have employees in different locations, then hosted may be the way to go.  For a flat monthly fee per phone you can have all the features of a traditional PBX with none of the headaches.

However, as the number of telephone sets increases, the cost/benefit decision changes.  Remember, with a hosted system, in effect you are renting, not buying.  Traditional PBX systems, as function of the cost per telephone set, have continued to drop in price.  The cost of ownership five years out clearly favor purchase or lease of equipment over renting.

In the 10 to 30 phone range customers should look at the ROI of purchase versus hosted.  Over 30 phones, most businesses would benefit from owning rather than renting.  Just because new technology is available does not mean that it is right for every business.

Also, most new PBXs can support VoIP telephones at remote locations.  If a business has a main office and multiple small remote locations, they can be better served by stand alone VoIP phones at those remote locations.

The Internet has influenced all areas of personal and business life and it will continue to do so in the future.  Just make sure that the technology is used wisely for your application.

AT&T announced that they lost 1.2 million voice subscribers from a year ago.  The writing is clearly on the wall that analog phone service is on its way out.

It is being replaced by VoIP service and wireless.  In my opinion, as the infrastructure supporting both networks matures there will be an even faster migration away from wireline providers.

Besides the dramatic cost advantage over wireline services, customers are taking advantage of more features and better access to their accounts.  They can manage their bills and make changes to their account online.

The trade off right now is quality of service.  Analog lines still offer an advantage when it comes to reliability and better audio.  However, this will change over time.  Remember, the data networks were never designed with voice transmissions in mind. 

The network engineers are playing catch up when it comes to voice, but the demand for better and more reliable service is driving the need for more improved voice networks.

The best is yet to come.

More and more businesses are switching from AT&T to VoIP service providers like Vonage and Comcast.  We are switching about two a week.  It is all about saving money these days.