Are you thinking of using a hosted PBX?

We are often asked our opinion on using a "Hosted PBX" instead of a traditional on-premise Telephone System. Here is a little information regarding the two options.

Traditional on-premise Phone Systems

First let me say that we are somewhat bias when it comes to traditional on-premise telephone systems.  After all, we have been installing them since it became legal to do so, many years ago. 

Before the government breakup of the Bell System in 1984, it was illegal to connect your own telephones to the telephone network.  That meant you needed to pay the telephone company for every phone you had.  It is similar to the way the cable television industry works today.  Lets hope they change that law soon as well.

We have installed thousands of phone systems from various manufactures and many are still in use after 15+ years of service.  On-premise systems are very reliable, in part because they rely on normal telephone lines which are delivered separately from each other.  These lines are typically installed by Verizon, Sprint or AT&T but are also available from Optimum Voice, Time Warner Cable among others.

These are some common on-premise phone systems

Panasonic KX-TA824	Panasonic KX-TD816	Panasonic KX-TDA50	Panasonic KX-TDA100

The alternative to an on-premise Phone System - A Hosted PBX

Today there is a lot of hype and some confusion regarding "Hosted Phone Systems".  So what exactly is a Hosted Phone System or Hosted PBX?  A hosted PBX system delivers PBX functionality over the Internet. The PBX hardware is located off premises, usually at the company providing the service.  This prevents the end user from having to purchase on-site PBX equipment and reduces the up front costs. Users still have to purchase the telephone sets for each user.

Another advantage is the use of VoIP telephone circuits (SIP Trunks) in place of the Plain Old Telephone Service (POTS) lines from the phone company. These are typically bundled with the Hosted PBX and included in the monthly contract price for the system. While these VoIP lines work fine for most voice calls, many times they do not support fax machines, alarm systems or modem transmissions. This requires users to order regular telephone lines for such devices and reduces some of the cost savings. Many providers do offer Internet faxing capabilities but they have limitations such as faxing preprinted forms or other hard documents.

The Pros and Cons of a Hosted PBX

Pros
Lower up front costs
Use of cheap VoIP telephone lines
Allows incoming calls to ring multiple locations
Web browser voice mail access portal

Cons
Reliability is only as good as the Internet Connection
Do not support Fax machines, alarm system or modems
Loss of control and must use the contract company for service
Ongoing and unpredictable long term costs
Poor voice quality at times
Security of conversations

Other things to consider

Unlike Hosted PBX's, an on-premise system does not rely on the Internet which can be extremely unreliable for real time voice traffic.  Every call (incoming or outgoing) within a hosted PBX travels across the Internet.  This means if your network, router or Internet connection fails you cannot make or receive calls.  Many Hosted PBX providers say they will reroute your calls in the event of a problem but this can often take a long time or not happen at all.

With an on-premise system, if one line fails you have others to use to make and receive calls. This is vital in most business environments.  Many on-premise systems today can use a mix of low cost VoIP trunks as well as standard POTS lines providing the best of both worlds.  Use the VoIP lines to call out and still have the reliability of regular lines if the Internet goes down.  Because an on-premise system can also use standard phone lines, it is not necessary to have separate lines for Fax, alarms and modems.  You can simply connect the lines to both the phone system and other devices in parallel.

One of the most overlooked advantages of an on-premise system however is the long term operating costs.  Purchasing the PBX hardware may cost more up front, however there are less long term operating costs.  When you consider many of the lease options available today, most companies will actually own the equipment within three to four years.  Leasing a system is usually comparable to the monthly contract fees charged by hosted PBX providers.  The difference is that at the end of the lease of on-premise equipment the monthly recurring cost (MRC) drops dramatically.  With a hosted PBX you will be charged a monthly contract fee for as long as you use the system.  There is little guarantee that the hosted PBX provider will not go out of business or merge with another provider who raises the rates.

Here is just one of the letters we have received from people using hosted PBX's who wish they didn't (or don't anymore).

Dear Customer,

Today we experienced a disruption in our services that impacted your voice service. The outage appears to have been caused by a data failure with one of our underlying carriers, and we are working on identifying the root cause and why our backup services did not failover as they are designed to do.

Service has since been restored to most of our customers, and we are in the process of fully restoring service to all customers. If you are currently without service, please unplug the power connection to your equipment, wait a few seconds, and then reconnect the power connection.

We understand the importance of providing reliable phone service to you and deeply regret the interruption this issue has caused. Delivering on and exceeding the service level goals we set for ourselves is our top priority.

We value your business and thank you for your patience.

If you are considering a hosted PBX for your new or existing business, please give us a call.  Let us show you how you can accomplish many of the same functions with an on-premise phone system.  Also keep in mind that you can lease a phone system for the same amount you spend every month on a hosted PBX.  The difference is that once these lease ends, so do your monthly payments.  With a hosted PBX you pay forever!

Give us a call today to keep control of your telecommunications. Call Now: 800-361-5839