Thoughts on Hosted VoIP

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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.