Premise Based System or Hosted Voice over IP?

Most every organization in the market for a new telephone system has a choice: a premise based system or Hosted Voice over IP (VoIP). With Hosted VoIP, there is a monthly fee per user, the telephones are all IP handsets and all telephone traffic travels over an internet connection (FIOS, Comcast, a data T1) instead of telephone lines.

Having options, including what type of a telephone system to implement, is a good thing. Having options also means that a thoughtful and thorough comparison should be performed to determine what the best solution will be. A proper evaluation of these competing approaches should look at both cost and functional considerations.

Let’s consider the comparative cost issues first. All hosted solution providers identify cost as a big advantage over a premise based system as “there is no equipment to buy”. Hosted IP solutions generally cost from $30-50.00 per user per month. At an average cost of $40.00 per user, an office of 10 phones is looking at $400.00 per month, 20 phones at $800.00 per month, 30 at $1200.00 a month and so on. For those looking to purchase a system outright, a premise based system is a better deal in 18 months or less. If a lease/purchase program is considered, the premised based solution will cost less per month immediately, the payments will end at the termination of the lease and the system can continue to be used. Hosted IP payments continue for as long as the system is in use. Considering that the average life of a phone system is 7-12 years, the financial advantage of choosing a premise based system is huge.

The only exception to the financial case for purchasing a telephone system is the small business that needs up to five phones at the most and has a geographically dispersed work force. A great company to consider for Hosted VoIP if this scenario describes your organization is Quality Connections. Check them out at http://qualityconnections.com/downloads/quality_brochure.pdf.

There are other potential costs with a Hosted VoIP deployment and these provide a useful segue to the functional considerations that should to be addressed in a comparison of the competing solutions. IP telephones require computer wiring and electrical power, and they are the only option available in a hosted environment. Additional wiring may be necessary if there are not two network jacks at each work station. An alternative to this is to connect the phone and computer to the same network jack – IP phones allow this is as most have a built in jack for a computer. Pursuing this approach requires a network assessment to be performed to determine if the existing computer network can accommodate the additional load of voice traffic and if it can not, then either managed switches will need to be purchased to prioritize voice traffic or the office will have to be rewired for a duplicate network for voice. If neither of these steps are taken, there will be issues with voice quality. Premise based systems such as the Samsung OfficeServ 7000 series platforms we distribute offer the option of either digital or IP station instruments and let the end user decide which would be the best choice for their specific needs.

The power choices for IP sets are a power brick for plugging the phone into an electrical outlet or a Power over Ethernet (POE) switch which would centralize the power source. The first option is not always convenient or particularly elegant and the second represents  yet another cost associated with implementing Hosted VoIP.

I will begin my comments on the final issue that should be considered when evaluating these competing solutions by asking an old question: is it best to put all your eggs in one basket? In a Hosted IP environment, telephone calls and internet access are both dependent on the internet connection – if it goes down, all communication to the office is lost. Voice quality issues can also arise when using the same internet connection for both voice and data as there is no way to prioritize voice on the public internet. Increasing the amount of bandwidth can help, but not always as bandwidth is not the only determinant of voice quality in IP telephony, or a second internet connection can be installed and dedicated to voice. Both involve additional cost, with the degree varying based upon the broadband choices available.

Selecting the right phone system is an important decision. As is obvious from my comments on the matter at hand, I strongly believe that installing a telephone system is a far better choice than hosted VoIP in most every case for reasons of cost, functionality and flexibility. The fact that there is a choice and competition is in the best interest of everyone.