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Hosted IP Telephony vs Telephone Systems - the truth

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What is Hosting?

It is the use of telephone system without having the traditional “box on the wall” in the users’ premises. It is a PBX-like service providing switching at the providers telephone exchange. Normal facilities are provided such as; Hold, Transfer, Divert (on no reply or busy), Call Waiting, Three Party Conference, Pickup, Ring Back, Alarm, Redial and Voicemail, but by a device outside of the business’ building.

Is a Telephone System via a Remote Host new?

Yes, if you account for it’s chosen transmission language being Voice Over Internet Protocol. Smaller telcos began to offer it in 2006/2007. Larger telecommunications operators are expected to have completed development ready for launch sometime in 2012.

Weren’t there previous similar options?

Northern Electric (later known as Nortel) called their version IBN or Integrated Business Network and enhanced it with their proprietary P-phone sets in the mid 80s. British Telecom has marketed FeatureLine (although refers to it internally as Centrex) since the 1980s. It is utilising the robust Time Division Multiplexing (TDM) as it’s protocol. BT owns and manages all the communications hardware and software necessary then bundles it for a monthly fee.

How does the Telco sell it versus Telephone Systems

The capital cost associated with a telephone system is replaced with operational because no kit resides on the customer site. It is managed directly from the telephone exchanges, with lines being delivered either as individuals over copper pairs or by combining a quantity of them over a single link. In effect, Centrex provides an emulation of a true PBX. Extensions can phone each other with 3, 4 or 5 digits, depending on how large the group. Facilities such as Direct Inward Dialing (DID), where employees are offered a direct and unique telephone number for incoming calls, are standard.

Why didn’t sales outperform those of Telephone Systems?

Although tempting for start-up firms, most customers continue to procure a telephone system for a small office as this means that they retain control and reduce ongoing expenditure. Large corporates have tended towards “key behind Centrex” again for controlling and opex reasons. Without a telephone system each user is attracting the price of a line at an inflated charge. Ease of use is lacking and things like memories, tannoy and CTi are impediments.

The proven advice

It is good to be leading edge but is painful to be “bleeding edge”. Look around you. Why do you think that bigger organisations, who have telecoms managers and departments, have not succumbed to putting the functionality offsite? Externally powered telephony is the preserve of micro-businesses and huge corporate entities such as banks. Even they still hook these services up to a telephone system locally.

VoIP based telephone systems allow phones at any location, with a WAN or broadband connection, to act as a local extension. Hosted IP is just Centrex with a less established type of signalling.

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