Pros and Cons of Hosted Voice Services

Part 2 of Phone for Rent: Understanding Hosted VoIP Services – Hosted PBX offers advantages—such as lower capex—and possible disadvantages—like increased exposure to outages—but the pros outweigh the cons for many.

By Mark A. Miller | Posted Mar 24, 2009
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In our previous tutorial, we kicked off this ongoing series by introducing the concept of the hosted PBX, or hosted telephone system, in which the switching function is moved from the customer’s premises to those of an application service provider (ASP), which then takes on responsibility for a significant share of the network implementation and ongoing management functions.

We also reviewed some of the predecessor technologies to hosted PBX applications, including hardware PBXs (on-premises switching), Centrex service (central office switching), and IP PBXs (software-based switching). In this tutorial, we will examine some of the architectures and benefits associated with hosted PBX technology.

Perhaps the best way to describe the architecture of a Hosted PBX environment is to contrast it with the more traditional premises-based system. A typical voice switching system (whether it be a conventional PBX or an IP PBX) consists of several key components: telephones for the end users—which may vary in their features and complexity—a switching system to connect those telephones, and trunk circuits that connect to local and long distance carriers. In addition, data interfaces are required for the end users (connecting to PCs, servers, POS terminals, etc.), routers for data connections within the network, a firewall for access security, and a border router or session border controller that provides a connection to one or more Internet Service Providers and the outside data world.

A hosted PBX solution still requires end stations (telephones, PCs, and so on), and an interface so that those end stations can access other stations and the outside world. However, this is where the similarity ends. In the hosted PBX model, all of the intra-premises connections (both voice and data) are handled by a router. That router, along with other access devices, such as a firewall, would then connect to an ISP, and on the other end of that broadband ISP connection is the switching system that that is provided by the hosted PBX provider.

This is where we begin to see the advantages and disadvantages of both architectures. In the case of the IP PBX, the switching system is at the customer’s premises, requiring that customer to provide configuration changes, maintenance, program updates, and so on (or pay for a maintenance contract so that someone else can provide this function).

In the case of the hosted solution—since the switching system physically resides at the service provider’s location—the hosting provider takes responsibility for the maintenance functions and typically provides a simple web-based interface to handle moves, adds, and changes (collectively called MAC). So in this case, score one for the hosted solution.

On the other side of the coin, however, the IP PBX has multiple connections to the outside world: to local and long distance carriers, plus one or more ISPs. If one of those connections fails, more than likely you can still reach the outside world through one of the other circuits. Not so with the hosted solution: Since a broadband connection provides the link to the hosting provider, if that link fails, you are on your cell phone calling tech support—unless of course, you are willing to pay for duplicate broadband connections to multiple ISPs. So in this case, score one for the redundancy found with the IP PBX. Some providers recognize this vulnerability and replace the ISP connection with redundant T-1 lines to the hosting location, but the cost factor for these duplicate links must certainly be a consideration.

Aside from sheer reliability, the architectures differ in other, more subtle ways:

  • Initial investment: the initial cost of the IP PBX is paid for by a purchase or lease of that equipment from the manufacturer, where a hosted solution is typically charged for on a "per seat" basis. Thus, your first cost with a hosted solution is likely to be less—a key advantage for smaller businesses that require a smaller number of end stations.
  • Scalability: as your company grows, the hosting company is responsible for adding capacity to support your requirements. With an IP PBX, you may need to add to or upgrade the system as you need more lines.
  • Overall system reliability: five nines (99.999 percent up time) reliability is fairly common objective for networking equipment, but there are adjunct systems, such as data storage and commercial power backup, that are also required for total system reliability. The hosting provider is very likely to already have these other systems in place, where you may need to add them to a premises-based IP PBX.
  • Multi-location support: if your business consists of multiple branch offices, having those locations connected by the hosting provider is a key benefit of their centralized architecture—and the same can be said for mobile or remote workers. In the IP PBX case, you would likely need individual circuits, plus the management that goes along with that type of configuration.
  • Support costs: the IP PBX requires a local staff, plus a network-knowledgeable person in each location to handle maintenance and support tasks. In the case of the hosted solution, that application service provider is likely serving many other customers, and as a result, is likely operating a 24 x 7 Network Operations Center (NOC). That NOC likely has network engineers with more experience than your staff, especially those that are tagged with supporting a branch office on a part-time basis. Thus, outsourcing your network maintenance and support (like many outsourcing endeavors) may be more cost effective.

But the architecture is only part of the story. In our next tutorial, we will examine the marketplace for these voice services, and look at some of the homework you need to do before you jump in.

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.

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