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Voice, Data &
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March 2008, Number
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The 3 Flavors of Business
Who Buys Them & Why
VoIP Hosted VoIP
Migration to VoIP
Vendors How to Price it Out (quote Checklist) About/Contact
Small and medium-sized business (SMB) owners have been hearing about
VoIP for at least five years but most believe (or want to believe) that
VoIP is not yet ready for prime time. They remember trying out Vonage at
home and thinking "It's to squeaky & there's too much delay!" But in the
back of their minds they suspect that things have changed and they should
at least find out who's doing what with business VoIP. Things have
changed. Over the past eighteen months or so three variations or "flavors"
of VoIP have emerged, each targeting a specific type of business.
These 3 Flavors of Business VoIP are "House", "Hosted" and "Hybrid".
House VoIP is for those long term stable businesses that are ready to move
up to the next logical level of phone service and can buy a whole new
phone system. Hosted VoIP is generally for those businesses that are new
or are opening new branches and don't want to invest in a long term phone
equipment lease. Hybrid VoIP is for those businesses that want to continue
to use their current non-VoIP phone systems but want the benefits they can
get from the VoIP "dial tone".
"House" VoIP (AKA
above, House VoIP is what most businesses would buy first if they
had a very stable business, they new what they needed their for system to
do over the long run, long-term commitments are not a problem and they
wanted to "do VoIP right the first time". As the picture here
suggests, House VoIP is just like their current phone system in that every
employee has a normal business phone sitting on their desk and and there's
a PBX or phone box "in their house" somewhere - usually the phone closet.
By having an in-house VoIP phone solution where the Internet protocol
(IP) PBX (private branch exchange) equipment is on the premises, business
owners have direct control and ownership of all the "piece parts" needed
to take advantage of all the cool things VoIP phone service is said to
offer businesses. Since all new phone equipment is generally needed for
the House VoIP solution though, short term cash savings is rarely one of
the immediate benefits of of the IP-PBX "forklift phone solution"
(forklift out the old phone system & forklift in the new).
(An important note here is that once a business invests in a House VoIP
solution by bringing an IP-PBX in-house, they can become the phone company
for virtually all their remote offices and home offices by being able to
provide "Hosted VoIP" to them as will be discussed in the next section.)
So how does a business owner know if House VoIP is the way to go? The
decision process would be similar to replacing a leased vehicle where the
lease had just expired. If the business needed the new leased vehicle to
do the same long term job functions as the old vehicle and no future
vehicle capability changes need to be accommodated during the future term
of the new lease then the obvious solution would be to simply lease new
equipment for a long term. In this analogy, an owner of a stable business
might simply lease a hybrid car - same basic function as a gasoline car
but with an accommodation for the ever increasing cost of fuel. Now
looking back at the phone system choice, the same business owner would buy
a House VoIP solution - same basic long term lease but with an
accommodation for being able to take advantage of current and future
The same business owner though might by unsure about his or her need
for a vehicle in the future though. If the business environment is
changing or the future functional requirements of the company vehicle are
not clearly visible, the owner might opt to simply rent a service vehicle
in the short term. While a rental costs more in the short run the business
owner avoids the long term cost associated with being stuck with a long
term lease for equipment no suited to a changing business environment.
VoIP" (AKA Pay-As-You-Go)
Hosted VoIP is like renting a car instead of leasing one. It cost more
in the short run but you preserve long run flexibility if you really don't
know what you need for the long run and/or the short run is all you need
to focus on.
As the image to the right suggests, with Hosted VoIP your get the cool
business phones and all the cool stuff VoIP phone service give you but you
get to skip the part where you have to own an IP-PBX (and have an IT or
phone person program it and pay for software license upgrades, yada, yada,
What you don't get out of though is having to buy the cool phones,
known as IP phones that cost in the neighborhood of under $200 each (for
ones you'll be sorry you bought) to over $400 each for ones that make you
feel as cool as you want to feel after "going VoIP".
There's still an IP-PBX making all your phones do the groovy VoIP
things but the IP-PBX is not housed at your house but at your Hosted VoIP
providers house around the block or half-way around the world. After
buying all the IP phones you need (one for each employee just as you have
to do with House VoIP), instead of paying monthly lease payments for an
IP-PBX that makes you IP phones work, you pay a monthly license fee to
your Hosted VoIP provider for each and every IP phone they are making
work. This monthly "seat" charge runs anywhere from a low of $15 a month
(pay a little to get very little) to about $50 a month (now you got
everything you need).
(An important item of note here is that in addition to "some phone
company", the Hosted VoIP service provider can be a businesses corporate
office that has an IP-PBX. As noted above, once a business has an in-house
IP-PBX, they can become the Hosted VoIP provider for all their remote
offices and employee home offices.)
While House VoIP is good for stable companies that have most of their
employees working in brick & mortar offices, Hosted VoIP is ideal for
"virtual businesses" where most employees are either working out of small
remote offices, a home office or are always on the move.
In many ways, Hosted VoIP is pretty much the same as the "Centrex" dial
tone that was first introduced by the local Ma Bell phone companies in the
early 1990's. As many may recall, after the breakup of AT&T, the seven
local phone companies were barred from selling business phone system
equipment. The local phone companies saw not being able to sell PBX's as a
huge market disadvantage. To skirt this challenge they invented Centrex
dial tone and told businesses that all they needed was Centrex and a
simple phone as there was no longer a need to buy and maintain an
expensive on-premise PBX.
While few stable "silo-type" businesses adapted the non-PBX Centrex
dial tone solution over the long run, it was adapted by many of the same
types of businesses that are adapting Hosted VoIP today - hospitals,
governments, schools and other "campus-type" spread out business
Hybrid VoIP (AKA
"OK but I'm not buying any new phones!")
businesses are perfectly content with their existing phone systems and are
only interested in VoIP if it can actually lower their overall phone, data
and Internet bills, the VoIP phone companies have invented Hybrid VoIP.
A Hybrid VoIP solution brings VoIP dial tone to the customer's existing
non-VoIP phone system and uses an "integrated access device" (AKA "black
box") to convert the VoIP dial tone back to something the existing phone
system can use. In most cases the resulting equipment setup in the
customer's phone room looks almost the same as the equipment setup they
get with a normal non-VoIP T1. So what's the bid deal?
The big deal is what it takes to bring non-VoIP dial tone to a business
- a big monopoly-type local phone company with lots of money and big
customer phone bills. In many parts of the US, because of the huge costs
associated with bringing in the old-fashioned (and expensive) non-VoIP
dial tone, the only competitive options many businesses have are those
being offered by the new Hybrid VoIP phone service providers. Bringing
dial-tone to a business over a VoIP T1 is much less capital intensive than
bringing in the same dial tone over the older technology. (This is why
while many monopoly local phone companies are fighting to keep VoIP
competitors out they're migrating many business customers to the VoIP
dial-tone technology themselves - to save money.)
For many businesses then, because of the option of Hybrid VoIP, the
choice to switch to using VoIP technology over what they have now will be
as intimate as the choice to choose to buy their office paper clips from
Staples or Office Depot - "Who cares, whatever's cheapest and works best.
Let's move on!"
The Business Migration
Just as sure as analogue television is being completely phased out due
to digital television in 2009, with few exceptions, for the vast majority
of businesses, VoIP dial tone will eventually phase out non-VoIP dial
tone. the question business owners need to ask themselves is not If
they'll switch to VoIP but when, how and under whose terms?
Most businesses will start with Hybrid VoIP. They'll order it the next
time they have to renew their existing voice and/or data/Internet T1s.
Once they have the new VoIP dial tone plugged into their old phone system
then they'll eventually swap out their old phone system to an IP-PBX phone
system to take advantage of all the cool, groovy VoIP things the dial tone
(they already have with the Hybrid VoIP) can do above just save them
As mentioned above, only rich companies with a sudden strong business
need for one of the new VoIP features will forklift out a working PBX in
the middle of a lease and bring in a new IP-PBX. Buying a new IP-PBX out
of the gate will be the norm though for new startup, classic companies
like doctor's offices, real estate offices and the like.
Like Centrex almost two decades ago, Hosted VoIP will likely always be
a bonze medalist in the VoIP favorite flavor race. There are just too many
compelling reasons for companies to go directly from Hybrid to House to
stay to long or fool around with Hybrid. Bringing the integrated Hybrid
VoIP solution remote and home offices though will be one of the primary
reasons many businesses buy IP-PBXs and choose to go right into the House
How to Price it Out
(quote Checklist) - Pricing VoIP out is the same as pricing out
a regular phone system. The person creating the quote will need the
following five pieces of information.
1. Locations - The physical service addresses of all locations the
business has. Also needed is a working Bell phone number at the business.
Usually a fax number will suffice.
2. Phones - How may phones or "stations" will be needed at the diferent
location broken down into three categories - "spare" (the phone by the fax
machine or in the lunch room), "worker-bee" (for the regular folk) and,
"executive" (for the owners, VPs, etc.).
3. Talk Paths - An estimate as to the total number of people on the
phone on an office to "out of office" call. this number will closely
approximate the current number of voice phone lines the business has in
4. Current Phone System - A description as to what kind of phone
system(s) does the business have now & what the owners like or dislike
about it. also include how old it is & how much is still owed on it if
it's still being leased.
5. Data Network/Internet Access - A description of What kind of data
network each location has, how each location accesses the Internet and
what kind of in-house or contract human resources each location can call
on to work on or upgrade their data network & Internet access services.
About/Contact - “Telecom Survival Guide
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of ATEL Communications, Inc. To discuss the specifics of this newsletter
and how they impact your business or to license or distribute "Telecom
Survival Guide" content, please contact ATEL broker & consultant Dan
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