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Decisions, Decisions...

By Greg Galitzine, Internet Telephony Magazine


In our last installment, we discussed reports from the analyst community pointing to the growth of the hosted VoIP market, particularly in regard to the small to medium-sized business (SMB) segment.

This month we will take a look at a choice faced by SMBs as they consider the move away from legacy TDM-based infrastructure toward an IP-based communications solution. Essentially, the choice boils down to embracing a full-on hosted VoIP solution right from the beginning or migrating to IP in a more measured, piecemeal fashion by way of a VoIP trunking solution, which would allow an SMB to keep its existing equipment and protect its investment.

Hosted VoIP
Frost & Sullivan, a global growth consulting firm, believes that the hosted VoIP market is set to grow over the next four to five years at a compound annual growth rate (CAGR) of 84%. The company�s research points at hosted VoIP services (in North America) growing from roughly 200,000 IP Centrex/hosted IP PBX lines to over four million lines in service by 2010.

The benefits of hosted VoIP are many.

To begin with, users pay on a periodic basis. There is no steep upfront cost; rather the cost is borne on an ongoing basis, per month/per station or per user. There is no need to pay a dedicated technical staff to manage the communications system as the solution is hosted off site by the service provider. The provider can enable the SMB to manage the regular moves, adds, and changes via a Web-based interface, which the company�s administrative staff can easily manage. As the company grows, it�s a simple matter to add more users to the system, each of whom can manage their own preferences and access the solution via a personal interface, often referred to as a �dashboard.�

If a company has multiple locations, the benefits of a hosted VoIP solution become more evident. Since all the benefits of the solution are available wherever the network reaches, companies with disparate offices can all share the same features and functionality of the system, regardless of geography. This also enables companies to take advantage of things like extension dialing to colleagues, who may be half a world away. Other benefits include the ability to more easily transfer messages between users. A single receptionist can serve as the entry point for a company with distributed executives, with a full view into their availability to take a call.

Many hosted providers offer applications such as unified messaging, the ability to engage in ad hoc conferencing, and more. All this serves to make geographically dispersed employees feel as if they are more connected with their colleagues, which leads to better decision making.

Hosted VoIP solutions typically use a consultative installation process to help avoid installation problems too. The service provider usually sends an advance team to do a pre-deployment assessment of an SMB�s office location(s). Based on that assessment, the proper steps are then taken to assure a smooth installation of whatever network gear is required as well as the phones. Beyond the installation, the service provider performs all the network monitoring and management remotely from their network operations center, providing a quality, hassle-free experience for the end customer.

Perhaps most importantly, hosted VoIP services are usually offered with 24 x 7 x 365 support and service level agreements. The service provider has a vested interested in not only keeping its customers up and running, but also in expanding and constantly upgrading its networks in order to remain on the cutting edge of new features and services.

For users concerned with disaster recovery and survivability, a hosted VoIP solution offers still more benefits. In the wake of numerous high-profile disasters, users are increasingly aware of the need to factor disaster recovery plans into their decision making process when it comes to purchasing a communications solution. Since hosted VoIP networks are based on IP and are generally built for redundancy, if a disaster, such as a flood, were to strike an enterprise location, users would be able to take their computers and their IP phones, head for higher ground, and plug in to the network wherever they could find broadband connectivity, and they would soon be up and running. If the users are not able to carry their phones with them, they can forward their phones calls from anywhere they have Internet access, through their �dashboard,� to their home phone or a phone at a temporary workplace without their customers knowing the difference. Since there is no expensive on-premises PBX hardware and all voice mail is provided from the network, not only is important information preserved, but the loss related to equipment is limited. It would appear to the outside world as if business is operating as normal.

VoIP Trunking
VoIP trunking or VoIP access services are a good way for SMBs to add IP functionality without making the wholesale shift to hosted VoIP services. VoIP trunks enable a company to maintain its existing key system, PBX or IP PBX and � more importantly � allow a company to maintain the functionality of that on-premises system further into the service provider�s network, as described below.

Todd Landry, Senior Vice President of IP PBX provider Sphere Communications, said in a interview earlier this year that prior to such trunking solutions, using VoIP involved an expensive and complicated system of gateways to convert voice signal from digital to analog and back again � often involving several such �jumps� during the call�s journey from sender to receiver.

�The jumps cost money, and they degrade the quality of the voice call,� he noted.

VoIP trunking eliminates the need for additional investment in hardware by the customer, as this is usually bundled as part of the service by the carriers. The fact that the call can travel into the service provider�s network as a digital signal allows the carrier to offer more features and functionality delivering the benefits of VoIP to the SMB.

According to the aforementioned Frost & Sullivan research, VoIP access and IP trunking services are on the rise as well. In fact, the number of deployed VoIP access/IP trunking lines is expected to grow from a scant 300,000 lines in 2005 to over five million lines in 2010, a CAGR of 70%. VoIP access lines are the perfect intermediate step for companies who believe in the future dominance of IP-based communications. It allows them to extend the useful life of their existing infrastructure or simply take a more conservative approach to embracing next generation technology.

Covad (News - Alert)�s Solutions

Covad provides its customers the best of both worlds by offering them a choice between hosted VoIP and a VoIP trunking solution. Covad�s vPBX service is the company�s fully managed hosted VoIP solution, which the company bills as being particularly suitable for sites with roughly 20 to 250 stations.

Covad also offers its PBXi Integrated Access Voice Service, which is a business-class VoIP service that allows SMBs to keep its existing on-premises phone equipment while typically providing lower operational costs. Once the customer�s equipment reaches the end of its useful life and the investment has been paid down, Covad can easily migrate that customer to its hosted VoIP service, vPBX.

At the end of the day, it all boils down to customer preference. If an SMB is ready to embrace a fully hosted VoIP solution with all the benefits promised by such a system, then that�s the right decision for it. If an SMB is not yet ready to take the plunge, for any number of reasons, then a slow and steady migration, by way of VoIP trunking, is probably the best way to go. IT

Greg Galitzine is editorial director of Internet Telephony magazine and the newly launched IMS Magazine.

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