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January 2008 | Volume 11/ Number 1
Inside Networking

How SMBs can get the Benefits of IP Telephony through Hosted Services

SMBs want to impact their top and bottom-lines, leaving technology to the experts. Frost and Sullivan observe that “companies that adopt hosted IP telephony typically save 20 to 40% on what they would have paid for a premise-based PBX.” At the same time, Infotrack predicts IP telephony is growing by 41% in the SMB space, meeting a range of SMB needs.

Hosted services deliver IP telephony and related applications over a common network infrastructure, without requiring SMB investments. Up-front capital and on-going operational costs for communications are replaced by a monthly bill. Hosted services eliminate the risk of equipment obsolescence and the need to undergo technology refresh, and avoid the need to hire or train technical staff. Through hosted solutions, SMBs win by having the communications capabilities and capacities they need, simply and affordably.

There are two styles of hosted IP telephony services. Some service providers offer a pure hosted IP telephony service, perhaps bundled with a DSL or cable modem, and rely on the SMB’s owned and managed in-building LAN. Other providers offer an end-to-end converged service, complementing their hosted IP telephony system with a service provider-owned and managed in-building access gateway and LAN. In this case, the key to successful deployment is that the in-building network must not only meet SMB needs for wired and wireless connectivity, security, performance and reliability (including business continuity in case of a WAN failure), but must be effectively managed from the service provider operations center.

Not only are hosted services a win for SMBs, but they’re also a win for service providers, SIs and resellers. Hosted services are not new per se, but hosted IP-based telephony and related applications offer new service opportunities. What do the experts say? Demand for IT and technical outsourcing is on the increase and shows no signs of a slowdown. InfoTech predicts that by 2009, two-thirds of SMBs expect to be using hosted IP telephony services. Securing a share of this lucrative market will depend on the service provider’s ability to deliver SMB customers flexible and affordable next-gen services such as IP telephony, unified communications, contact centers, network storage, backup and more – with greater velocity and reliability than the competition.

With hosted IP telephony and end-to-end converged services, an SMB’s communications system becomes an operating expense instead of a capital expense. SMBs can lower their costs, while simultaneously improving productivity and customer service and generally streamlining their operations. IT

Tony Rybczynski is Director of Strategic Enterprise Technologies at Nortel (

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