Hosted or Premise-Based VoIP System?

Between Vonage ads for residential Voice Over IP (VoIP) service and the "VoIP" buzz word all over the commercial world, the marketplace has been very confused by the two different types of VoIP phone system implementations- hosted or premise-based. Both use VoIP and each has its place in the market, but there are some significant philosophical differences, listed as basic comparison to help you decide which is the right model for your business.

SYSTEM Characteristics: HOSTED

• "Brains" of the system reside elsewhere
• Your company is one of many tenants on provider's system
• Limited administrative control (you can make basic changes)
• Must call provider to make other administrative changes
• Pay monthly recurring charge "per seat" that usually includes usage bucket of minutes
• Monthly payment is continual
• Can reduce overall telecom spend by eliminating traditional phone bill

SYSTEM Characteristics: PREMISE-BASED

• "Brains" of the system reside at your site or headquarters
• Your company is the only tenant on your system (unless you're a "landlord")
• Full administrative control of entire system
• Immediate access to make all administrative changes
• Pay one time or monthly lease-to-own payment for system hardware/software
• Monthly payment (if there is one) ceases after lease term expires
• Keep traditional phone bill and look to lower it OR eliminate it (you have choice) by using VoIP/SIP trunks

EXTENSION Characteristics: HOSTED

• Buy or lease handsets only
• Utilizes IP on LAN, WAN, and PSTN (using SIP trunk carrier)
• Uses IP handsets only
• Web-based Extension configuration/administration
• Often uses web-based click-to-call software
• Need to upload your contacts to web-based portal; little or no sync capability

EXTENSION Characteristics: PREMISE-BASED

• Buy or lease handsets and the PBX
• Utilizes IP on either/or LAN/WAN and PSTN (using SIP trunk carrier)
• Uses IP handsets OR mix
• Client-based Extension configuration/administration
• Uses web OR client-based click-to-call software
• Can integrate to your local contact database (Outlook, etc.) real time

TRUNKS/LINES Characteristics: HOSTED

• Uses only VoIP/SIP trunks
• Must port your phone number to data connection
• Must properly spec out bandwidth usage, QoS, prioritization and latency to support voice packets/call paths
• Potential for call quality issue: echo, choppy voice, dropped calls, etc. if not properly managed
• Should have Service Level Agreement (SLA) from provider

TRUNKS/LINES Characteristics: PREMISE-BASED

• Uses either traditional phone lines (analog or T1/PRI) or VoIP/SIP trunks
• Can leave phone number where it is or port to SIP Trunk carrier
• Call quality not relevant when traditional lines and/or T1/PRI used: voice call paths are guaranteed
• Call quality not relevant when used with T1/PRI; voice call paths are guaranteed
• Call quality not relevant with T1/PRI; voice call paths are guaranteed