Hosted VoIP – is it over?
24 Jul 2008
Hosted VoIP, the method of housing all your telecoms at a remote site, has long been heralded as the future. Resilient, cheap and effective, it was supposed to spell the end of corporate PBXs. Initially the industry issued bold claims and even bolder predictions for the amount of subscribers they would have come the end of the year. In December these advocates of hosted VoIP were confident that they were on course to meet their bullish targets, but by May the figures were looking far from what had been expected or hoped for. So what’s the future for hosted VoIP?
A recent survey carried out by telecoms consultants illume made for sobering reading. After nine months of spectacular double-digit growth, the last quarter has shown a dramatic slowing down in the number of endpoints being served. At the end of May 2008, illume announced that the running total of subscribers was 262,112, significantly less than expected. Is this due to a period of consolidation, or are there more tangible reasons for this unexpected swing against hosted VoIP?
The issue of perception is perhaps the most difficult to shake. For many, hosted VoIP will always be associated with often derided Centrex systems. Many of the problems that users encountered – the most serious of which was a vast reduction in telephone functionality – have now been rectified, with real carrier-grade hosted solutions offering the same functions as a conventional system. But there remains lingering doubts about the wisdom of saying goodbye to the dependability of a traditional PBX.
And it’s not just the reliability of the PBX that communications professionals miss; it’s the very physicality of the box being in the coms room. Again, it’s a perception issue, but handing over the running of all of your systems is something that makes some people nervous.
There are also concerns as to who exactly benefits from hosted VoIP. For some, it’s a solution suitable only for small to medium companies wanting to save on start-up costs. Others see it as the preserve of large businesses with many different outreach offices. The reality is that a lot depends on your financial modelling. Over the course of your hosted lease agreement, you may find that you pay more, but with a vastly reduced set up cost. While this might be perfect for companies or organisations with rigidly set yearly budgets, it’s not quite so cost effective for businesses who can buy an in-house system up front.
The most important thing is to feel comfortable with your telecoms and your telecoms provider. Relinquishing control, as is inevitable with hosted VoIP, is not always a relief for a company. Putting your faith in one organisation to run one of the most important aspects of your business means that you have to be 100% sure that they will provide a consistent and quality service. In the fast-paced world of communications, where will these companies be in three years, let alone seven? Will your small and dynamic operator soon be swallowed by one of the larger carriers? In house systems provide reassurance; hosted VoIP rely upon trust. It’s this leap into the unknown that may see hosted VoIP’s claim to be the system of the future, prove to be something of a false dawn.
There are, of course, a number of advantages to hosted VoIP – low set-up costs, pay-per-seat billing, and calls managed at network level. Then there’s the issue of resilience, which many hosted VoIP providers point to as their USP. With no single point of failure, they argue, the hosted solution is more reliable. Furthermore, some applications – call recording for example – are easier to roll out over hosted PBX.
These positives are, however, not cut and dried. Some argue that the costs over time are remarkably similar between the two systems, while others claim that hosted VoIP is potentially more risky as if service is lost, both internal and external communications will be dropped. Still more would counter hosted VoIP’s claim of the ease of deploying applications, as some clearly work better over in-house systems. There is no right and wrong answer here; the question is what is right for your business.
So is this right time to join the hosted VoIP revolution? A lot of that depends upon your broadband provision. In order for organisations to really make the most of hosted VoIP, increased bandwidth, with less contention, is required. Perhaps when this becomes more affordable, the industry will see the subscription levels meet their bullish predictions. Until then, the number of new endpoints might report another slowing down.
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