Point-CounterPoint: Hosted Voice vs. CPE

This post is part of a Point-CounterPoint open debate with fellow telecom blogger Dave Michels. In this new series, we both take extreme positions on a given topic. In combination these two opposed views are designed to provide a more complete perspective of the issue. To read a different perspective on this topic, click here.

Let me get this right out into the open…it seems to me simply insane for a small company buy a PBX. Buying a PBX takes precious capital for something that is often not a strategic asset in the life of the business. It’s at best “a necessary evil.”

We’re a small business, around sixty staff in total. Most of them live out their days in our corporate HQ in Cambridge, UK. But the “we” that I’m describing here is actually the dozen of us who earn our keep in the North American operation.

In the UK they enjoy the services of a rather traditional Alcatel PBX. While only six years old, it’s a digital dinosaur. Proprietary. Aged. Limited. Expensive.

The US operation is a very different operation. We’re everywhere, which is to say that we’re not all neatly in cubicles at a single location. We have small offices on each coast, and a handful of home offices. All are inter-connected using a hosted IP-PBX service.

As opposed to spending thousands on a PBX for our largest office we spent a very modest sum acquiring SIP handsets for everyone. Beyond this we pay only for the services that we use on an ongoing basis.

Our hosted PBX meant no CPE except the phones themselves, so our CAPEX was effectively zero. Our Opex is actually less than we had been paying to an executive suites office building to rent a portion of their elderly PBX.

In fact, the cost of the initial rollout was so low that we undertook the project clandestinely. By the time HQ noticed it was all up and running, proving it’s worth by saving us money and helping us to communicate better.

With none of the traditional issues of vendor lock-in, we opted for good quality SIP phones, focusing on a high-quality user experience. We also provide soft phones and SIP/DECT cordless phones where users require mobility solutions.

Cheap phones are a truly strange form of torture to inflict upon your staff. So is leaving them bound to their desks.

PBX hardware is itself a curious thing and suffers from raging featuritis. I can recall a list of PBX features that was literally thousands of items long. That’s an absurdity. Faced with such complexity small companies often must rely upon a reseller or VAR and hope against hope that they take the time to understand your operation.

There’s little merit to a dazzling list of features if they cannot be accessed to impact the operation of our business.

Small businesses typically need only the simplest of core capabilities from a PBX. This is something that hosted PBX service providers know all too well. They build their service offerings to suit their target market. The KISS principle plays a big role here.

Our chosen provider offers the features that we really need, like four digit dialing between extensions/sites, VM, IVR menus and on demand conferencing. They even offer private IM and presence indication. All these services are integrated into easy to use web-based administration & user portals.

As our provider continues to evolve their service offering we reap the benefits. For example, we now have very high-quality HDVoice (G.722) calling between offices, and even on our conference bridge. Again, no capex incurred. Sweet!

There are different sorts of hosted PBX services. Some bundle their service with hardware and even connectivity to deliver a one-vendor solution where all aspects of the service is under their control.

Other providers may take a more open approach, providing the service and hardware but letting you procure your own bandwidth to each location. Still others let you “Bring Your Own” hardware and bandwidth, providing only the service as their part of the solutions.

We settled upon such a BYO provider as the best match for both our needs and budget. They didn’t want to sell us hardware or nor trunks…just the core telephony service. This suits us fine since we are a few people at multiple locations, using various different types of network connectivity.

We save money in many ways. In the past we’ve paid hundreds of dollars for two weeks of analog phone service in a trade show booth at the Las Vegas convention center. Now we just add a SIP phone on the local internet connection. In fact, it doesn’t matter if the convention is in Las Vegas, Toronto, Santiago or Mexico City.

We also have the flexibility to instantly scale our installation up or down. In effect, adding or removing phones & DIDs we’re constantly “right-sizing” our telecom solution fit the economics of the moment. We pay only for what we use every month, with no long term commitments.

With offices in California, Houston & Miami we’ve suffered many natural disasters. Our hosted PBX provides enhanced business continuity. If California slides into the ocean* a traditional PBX in our Burbank office would simply die under water. Our hosted service allows us to easily set up shop anywhere we have a decent broadband connection.

Further, if we had one centrally located PBX I’d need to worry about having redundant trunk lines from different carriers. Using a hosted service that becomes their worry. It’s an area that needs to be considered when auditioning providers.

In implementing a hosted PBX the issues that you must handle directly are a little more mundane, yet still important. Does your chosen service provider support E911? Do you require/have a strategy for dealing with loss of IP connectivity at each location?

Do you provide a UPS for core network components, including POE to power phones? We do, even in home offices. It’s inexpensive and makes a lot of sense.

There was a time when the sight of a PBX in a local wiring closet meant I was in control of my own destiny. Now it’s just a burden that I don’t need. Our ITSP is a partner in the operation of our business. As we grow, they grow. As we succeed, they succeed.

A PBX is a budget-busting, power-sucking, noise & heat-spewing headache that I simply don’t need.

Disclaimer: the authors are intentionally taking extreme positions for the benefit of the series. Their personal opinions may not mirror the opinions expressed here. *as foretold in song, with acknowledgment and apologies to the late, great Warren Zevon