The Yin and Yang of Hosted VoIP: Hosted VoIP Hits the Big Time

By: Paula Bernier

Hosted VoIP can be a great match for small business owners like Karen Kanir (whose communications tale is told in the story to the right). But, increasingly, larger businesses are flocking to the service as well.

“Hosted IP telephony platforms have come a long way over the past 10 years and can provide flexibility, risk avoidance and economic scalability for enterprises looking to implement advanced IP communications capabilities,” says Elka Popova, North American program director for Frost & Sullivan. “According to our research, hosted IP telecommunications deployments have been embraced most by enterprises with a variety of geographically-dispersed locations such as government, education and retail organizations.”

Joan Citelli, director of corporate communications at 8x8 (News - Alert) Inc., says the hosted VoIP provider has seen this trend as well. She explains that, as noted by Popova, in many cases that’s because large companies are also widely distributed companies – with several branch offices and sometimes telecommuters, and the functionality of hosted VoIP enables all those locations to be served from the cloud easily and affordably.

Debbie Jo Severin, chief marketing officer at 8x8, adds that the fact that the company recently forged a relationship with New Edge Networks (News - Alert) to deliver an integrated solution in which its hosted VoIP services run over New Edge’s MPLS network is just another indicator of the trend. Running hosted VoIP over MPLS provides some large businesses with the added functionality, quality and security they may need to justify a move to cloud-based telephony, explains Severin.

Cardi Prinzi, president of New Edge Networks, says not only does MPLS allow companies with multiple sites to pull them together on a single network and with class of service, it also enables them to address their security concerns relative to cloud computing.

“So [the hosted VoIP space] becomes kind of a distribution channel for us to sell more network,” he adds.

In addition to working with New Edge Networks to market and deliver integrated MPLS/hosted VoIP solutions, Severin adds that 8x8 has a deal in place with Level 3 Communications (News - Alert). The two companies in December announced Level 3 would bundle the 8x8 service into select government contracts on which it bids. 8x8 recently went live with its first government installation served via this Level 3 partnership.

Meanwhile, New Edge has a second relationship in place with a hosted VoIP outfit. It’s also working in concert with XCast Labs, with which it had two customers signed as of mid March.

Cliff Rees (News - Alert), CEO of XCast, offers his perspective on what his company’s relationship with New Edge signals: “What to me it means is that hosted VoIP is becoming much more accepted, generally speaking, as a fundamental telecommunications tool rather than [be looked] at with suspicion or derision from corporate IT managers.”

XCast (News - Alert) expected to announce a relationship with a smaller, regional MPLS provider soon, likely before this magazine hits the street.

In yet another recent move pairing MPLS and hosted VoIP, MegaPath (News - Alert) Inc. this spring launched a hosted VoIP offer of its own, called Duet Hosted.

“The big messaging here was trying to put the quality back in voice,” says Dan Foster (News - Alert), MegaPath chief sales and marketing officer.

The fact that Nortel Carrier VoIP and Application Solutions Business, a leading provider in the IP voice space, recently unveiled gear to enable hosted VoIP services targeted squarely at enterprise customers is another notable development signaling large businesses’ interest in cloud-based telephony services. According to estimates by Nortel CVAS, hosted IP communications can be deployed at 30 percent lower cost of ownership than an on-site IP PBX (News - Alert) solution and can increase enterprise productivity by $500 per employee, per year.

“Our solution scales from thousands to millions of lines and offers powerful carrier-grade reliability and geographic survivability, which are essential in today’s fast-paced business environment where effective communication and collaboration tools have a direct impact on the bottom line,” says Samih Elhage, president of Nortel CVAS, whose assets GENBAND (News - Alert) Inc. on Feb. 24 announced its intention to acquire.

The Nortel CVAS Hosted IP Communications solution already is deployed in several enterprises, including a carrier-hosted deployment with BT (News - Alert) in the U.K. That installation involves 1,000 locations, 3 million calls per day and 20,000 call center agents.

But whether it’s an enterprise, a small or a medium business that’s shopping for a phone system, hosted VoIP has clearly become one of the options sitting squarely on the table.

“Everyone is offering it now” from a service provider perspective, notes Bob Duggan, director of the sales telephony division at B2B Computer Products, a value-added reseller.

“[For] any small company with five to 100 people upgrading a phone system, hosted PBX is in the conversation,” says Micah Singer (News - Alert), CEO and founder of VoIP Logic, a provider of wholesale VoIP-related services. “It’s one of the options.”

Adds Jim DaBramo, executive vice president of field operations at Airband, a fixed wireless provider that offers integrated hosted VoIP services: “From a market trend perspective, we’re seeing adoption of hosted VoIP services by larger SMBs due to the tight capital markets. More and more businesses are deploying hosted VoIP instead of buying on-site phone systems.” IT

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