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Telephone Systems

Hosted vs. Owned or premise-based VOIP systems

VOIP is an internet-based system. It takes the phone conversation over the internet. The required equipment may be online or on the premises.

In a hosted VOIP system, the actual telephone equipment is in your office – but the system is in the cloud, not on your premises. Instead, the system is in a data room, sending the info over VOIP to your business telephone instruments, through the company’s LAN network. The info goes through your internet connection to a service provider, located elsewhere.

What are the benefits of a Hosted system?

A hosted VOIP system is sold on a monthly rate without upfront costs – you pay for the services you need. If you’re only in for a short-term rental, this is a smart choice. These use large-screen telephones, which appear to have better technology – but this depends on the application. Hosted VOIP is not the best choice for a company looking for 3 years of service or more.

From a service standpoint or call-quality system… would this be a good investment if I have multiple locations? 

If you have your own host-on-premise, a premise-based system is still a better choice. On-premise means you don’t have to pay a hosting service to have multiple sites. Why pay for a cloud service when you can save money & do it all in-house? A premise-based system gives you control, whereas the internet is always in motion – you don’t have control over this.

A premise-based system is easier to use.  You control the bandwidth, and you control what’s being used. You can’ t control the bandwidth available via a hosted system, unless you spend a LOT of money with dedicated services. A premise-based system gives you more control.

With a hosted VOIP system, how do I get service? Won’t there be issues with the VOIP company and the broadband provider?

Let’s imagine you have a hosted system, and one of your employees breaks a phone. You ship it back to the phone company and wait for a replacement – or a repair.  Then the host company has to program it remotely. This wait time is disruptive to your business. If phones are critical to your business, an on-premise system and local company are best, because if equipment fails, it costs considerable time and money to replace and reinstall the equipment. A local provider is always preferable to ensure your business is operating at highest capacity.

What is a hybrid hosted system?

In the premise-based world, this is a hybrid hosted and digital system. A VOIP is always hosted. A hybrid system is the most reliable of all, because you have your own service for your voice, internet and computer systems.

How often do you have a phone problem vs. computer problem? Computer problems are 100% more frequent.  The more pieces you install between point A and point B, the more problems you’ll have. On a hybrid system, you can run a phone system, with VOIP on its own network – so it has greater accessibility to the network and to bandwidth.

I have a PBX. What’s the difference?

Private Branch Exchange is just an on-premise phone system. A PBX exchange is even used by cloud–based servers. They use it to exchange telephone calls through one branch. Marketers wanted a newer term, so they call it an IPPBX – it’s really the same thing – just new-fangled language to sell something. The technology has changed dramatically, but the functionality is intended to make phone calls and improve business.

What is SIP Trunking?

This is one way of using phone lines over the internet. You can use SIP lines on your premise system or in the hosted arena. The advantage is that you can use direct in-dial numbers to ring directly to your phone without purchasing a large service base. On the larger end, most people go with a PRI or D3 – a much larger system. SIP is a buzzword. In some areas, you can actually get your SIP lines cheaper than from ATT or Verizon.

One major caveat: you can get a SIP line from the internet for about $14.95. What they don’t tell you is that you must purchase additional dedicated bandwidth to run the SIP line – which means spending far more.

Hosted systems LOOK more economical – a monthly payment is much lower than a large up-front payment to purchase the system. How does this affect the total cost of ownership?

The biggest pitfall with a hosted system is that you’re actually renting the equipment. Instead of $15-20 thousand or even $5000 up front, most people actually lease the system with a dollar buyout or fair-market buyout. Recently we had a customer who had been paying$620 a month for the bandwidth for the service, plus $300 for their telephone equipment – for only 6 phones.

We offered them a premise-based system for a total of $300 per month. They’ll own the equipment after 5 years. A premise-based solution saved this small company $500 per month – and after 5 years when they own their equipment, the monthly payment will drop considerably. With the hosted system, after 5 years their cost would continue – because they’re renting the equipment.  On-premise is the way to go. If a company with only 6 phones can save $500 per month on a premise-based system, how much might a large company with 200-500 phones save per month? Over a period of ten years, you’re looking at a six-figure savings per month!

Wouldn’t I have to get a new system after 3-4 years anyway?

No. Most phone systems last 10 years or more. Some businesses use a phone system for 15 years with no problems, if they don’t need new features. If your phone dealer is maintaining your business phone system properly (as National Telesystems does) there is no need to replace it.

If the only stumbling block is the cash outlay to buy a system, there are alternatives. We offer many deals with no down payment. Hosted systems require some down payment. Unless you’re planning to set up a temporary office for less than a year – premise-based is the best option for a business telephone system.

So why are people renting hosted VOIP systems?

They see it as an easy way out: service and equipment on one bill. Seems convenient.  Many people don’t realize financing a system is an option. Additionally, hosted VOIP do an excellent job of marketing. You find them everywhere and they make outrageous claims of saving you 40-70% on your phone bill, but this doesn’t happen.

What businesses don’t realize is that these companies OWN your phone numbers. When these companies fold and disappear, your phones aren’t getting answered and your phone lines are down. It may SEEM smart up front, but many internet companies offering hosted VOIP systems are bad for your business. If your phone number isn’t working, Google doesn’t recognize your business.

Do your competitors in the premise-based world have the same access to financing that National Telesystems has?

We do have some special financing, but most telesystems companies do. Some companies need the down payment up front, so they can go and buy the equipment to install.

Which type of system does National Telesystems recommend?

We strongly recommend premise-based, if you can keep control and it’s financially viable, there is no comparison. Hosted is expensive, and when you sign a contract you’re stuck. Take the extra minutes to analyze this before you get entangled with a hosted system.

 

 

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National Telesystems, Inc.
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