Concepts of Hosted Voice Services

By Mark A. Miller | Mar 17, 2009 | Print this Page
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Running a business voice network can certainly present challenges to the network manager—especially in a smaller company where a small staff is typically responsible for the entire IT burden. Fortunately for such harried network admins, there are plenty of companies out there that are more than happy to take on part or all of that load. And by handing off the task of running the phone system to an outside provider, you not only cut down on your workload, you might even save some money at the same time.

The type of service offering that we are talking about goes by several different names, including Hosted PBX or a Hosted Telephone System. And since up-to-date phone systems today run on IP networks, rather than the traditional TDM phone network built by Ma Bell in the last century, they are often called Hosted IP PBX or Hosted Voice over IP (VoIP) services.

This article is the first in what will be an ongoing effort at Enterprise VoIPplanet.com to review the offerings as many of the regional and national hosted PBX providers as we can find. As such—at the risk of being a touch academic—let's lay out some background, starting by parsing some of the terms used above.

The term PBX stands for Private Branch Exchange, a device for connecting the telephones at your premises to each other and to trunks heading out to the telephone company’s central office. A PBX also typically provides telephony "features"—both familiar ones like call hold, call transfer, and voicemail, and more exotic ones like audio conferencing and music on hold.

Also associated with that PBX will be some type of dialing plan, specifying how many digits you need to enter to complete a call. For example, if your intended destination is a colleague in the same building, you may enter their 3- or 4-digit extension number. If your colleague is in another office across the country, you might have to enter a tie-line number (such as 8), and then the extension number. If you need to reach a destination outside of your company’s network, you might dial 9 followed by the area code and local telephone number, which will pick up a trunk circuit to the local telephone company's central office, which will then complete the call.

Some installations were candidates for an early kind of hosted service that is generally known as Centrex. With Centrex, customers had dedicated switching hardware, but that hardware resided at the telephone company central office, instead of the customer’s premises. Centrex lines were extended to each of the customer’s locations, allowing stations in different locations to participate in a common 3-, 4-, or 5-digit dialing plan. Centrex was a good solution for multi-location or branch offices (such as financial institutions), or for organizations that needed PBX functionality, but only on a short-term or temporary basis.

As the telephone switching industry matured (for both on-premises and central office implementations), software overtook hardware as the technology of choice. It became clear that much of the switching functionality could be implemented in computer software, and that the days of the physical—electro-mechanical—switching systems were numbered. And, as Internet Protocol-based networking technologies matured, along with the Internet itself—the worldwide network of interconnected private IP networks—the combination of software-based switching with IP-based transport yielded the IP PBXs that dominate telephony today.

An earlier VoIPplanet article series reviews over 60 different vendor architectures that provide IP-enabled switching solutions. (See the series index, |http://www.voipplanet.com/fundamentals/article.php/12117_3605196_2}here{.).

And with the birth of the IP PBX industry, was born a new contender in the telephony marketplace: Hosted PBX or Hosted VoIP service. Loosely defined, hosted PBX is delivering phone switching and PBX functionality as a service over an Internet connection.

In effect, Hosted PBX combines key concepts of the PBX (premises calling features), Centrex (central office switching), and IP transport (high speed connections and converged voice/data networking). It also encompasses another relatively new idea: Software as a Service(SaaS), in which an application (in this case, telephone switching) is licensed to an end user organization.

With SaaS, the software vendor/service provide takes responsibility for ongoing maintenance and support, and also retains greater control over their product, as it is typically hosted on the vendor’s server. Among other things, this gives them the ability to cut off the service if the customer does not pay their monthly bill, or fails to renew their contract.

On the positive side of the equation, vendor/service providers can generally be assumed to know their product inside and out, and be striving constantly to improve it. And the customer—if s/he has chosen carefully—gets a reliable, up-to-date phone system for little or no capital investment, typically with a fixed, predictable cost structure, and can pretty much be quit of administrative responsibilities relating to the phone network.

Before you sign up, though, you had best know what you are getting—or getting into. The typical features of a hosted PBX system will be the subject of our next tutorial.

Copyright Acknowledgement: © 2009 DigiNet Corporation®, All Rights Reserved


Author's Biography
Mark A. Miller, P.E. is President of DigiNet Corporation®, a Denver-based consulting engineering firm. He is the author of many books on networking technologies, including Voice over IP Technologies, and Internet Technologies Handbook, both published by John Wiley & Sons.