Hosted or traditional? Featured

7:00pm EDT February 23, 2009

Despite all the various advances in technology, there’s always going to be one old standby that every business needs: the telephone.

Today, there are more telephone options than ever before and deciding which one is right for your business can be a confusing and time-consuming process. One of the hottest options out there is hosted telephony — having your telephone services managed and maintained by an outside third party.

“There is a trend in the business world of moving toward Communications as a Service (CaaS), which is IP telephony that is managed, owned and housed by a third party,” says Monty Ferdowsi, president of Broadcore. “Hosted telephony centralizes all voice applications for all your locations, and it is the future of business class telephony.”

Smart Business spoke with Ferdowsi about hosted telephony, how it compares to traditional telephony, and how businesses can determine if and when it’s time to make a switch.

What are the pros and cons of traditional telephony?

Traditional requires the purchasing of on-site, premise-based equipment for every different feature you need, plus you have to obtain multiple services for Telco and Internet. First, you have to select your systems and equipment, which means dealing with different, biased vendors representing multiple brands. Then, you have to choose your phone company and what plans to use — and there are a host of different options when it comes to selecting a local, long distance or Internet service plan. All of this leads to a large initial capital investment and an even longer process.

And then the really hard work begins: implementation. You’ve got to get the system up and running, and then deal with ongoing repair, maintenance, upgrade and training costs. But, no matter how well you maintain and upgrade your equipment, it still becomes obsolete in a matter of a few years.

You’ve got to utilize internal resources and staff to oversee the phone system. Plus, you’re dealing with multiple vendors, which can lead to finger-pointing issues when something goes wrong. Multiple vendors also means multiple monthly bills, which means time-consuming, erratic expenses. You don’t have true control over the in-house system, moves and changes — you’re fully dependent on your vendors for support.

Are there pros to traditional telephony?

Absolutely. It’s old, proven technology, and it’s a mostly stable platform. And, if you have the need to own your platform, it’s great. But, with continually advancing technologies and the need to do business better and faster, the cons seem to outweigh the pros.

What is hosted telephony?

Hosted telephony eliminates the need for in-house equipment, so you don’t have to deal with all the issues associated with equipment, such as obsolescence, maintenance and upgrades. Also, since Telco and Internet services are provided on the same platform, hosted telephony eliminates the need for multiple vendors and multiple bills. There is no equipment on-site to be maintained, updated or repaired. You get advanced capabilities without the hassle and expense of multiple systems, vendors and pieces of equipment.

What are the benefits of hosted telephony?

It’s a truly consolidated service — one company provides you with all the PBX, Telco and Internet services you need. Instead of dealing with a phone system vendor, the local phone company, a long distance company, a broadband Internet provider and conferencing services, hosted telephony gives you all those systems and services under one reliable and advanced platform.

Also, your hosted telephony provider is responsible for the day-to-day operations and maintenance of your telephone system, including adding new lines and changing faulty components. With traditional telephony, you’re responsible for these functions, as well as the expenses that come with them. Hosted telephony offers reliability, seamless upgrades and complete mobility: manage your calls and messages and use your cell phone or a laptop soft phone as your business extension from anywhere using any phone or any Internet connection. With hosted telephony, you can conduct business from anywhere — from satellite offices, from home — just as if you’re in the office.

Hosted telephony generally offers a lower total cost of ownership than traditional phone systems. Again, you’re not plunking down a large initial investment, you don’t have to worry about replacing obsolete equipment and you’re combining your various phone charges into an all-in-one package.

Are there drawbacks to hosted telephony?

Since it does not require a core equipment purchase, hosted telephony may not be desirable to people who have to own and touch equipment. A potential problem with all phone systems is that when the connection to the outside world (i.e. phone lines, PRI, IP T1 services) goes down, you’ll lose the ability to make and receive calls. However, with hosted telephony, you can still receive calls and conduct business even if your connection is down. Since everything is run at the provider’s data center, all your systems will continue to function normally, even if your office is offline. This is particularly beneficial if your office is hit by a catastrophic event.

MONTY FERDOWSI is the president of Broadcore. Reach him at (800) 942-4700 or