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Hosted Voip Or Voip PBX? Choosing The Right Service For Your Small Business

by Eva Gilbert

Thanks to the prevalence of high-speed Internet connections and its ever-increasing speeds, plenty of small businesses have managed to shake up the way they do things. Nowhere is this clearer than in the communications arena, where many businesses are cutting copper cords in favor of Voice-over-Internet Protocol (VoIP) services.

The two main choices usually offered are hosted VoIP and IP Private Branch Exchange (PBX). The following offers a detailed comparison of what these voice services have to offer.

VoIP PBX at a Glance

VoIP PBX systems are similar to the typical PBX setup found in a variety of larger small businesses and many medium-sized companies. Your IP PBX server and other assorted equipment reside on-site with an in-house team responsible for maintenance and upkeep. Calls to and from your IP phone go through the PBX server and over your business's Local Area Network (LAN).

Redundancy is one benefit of having a VoIP PBX system. In addition to going through VoIP, calls can also go through traditional phone company lines. This can be especially helpful during unexpected Internet service disruptions. Small businesses can also add custom features and additional users with relative ease instead of waiting for a third-party host to handle the task, if it can be done at all.

Despite the control and flexibility that having a VoIP PBX system offers, there are a few drawbacks:

  • VoIP PBX systems cost more to install, manage and maintain than their hosted VoIP counterparts. It also costs much more for a small business to purchase brand-new IP PBX equipment than it does to start with a third-party hosted solution.
  • You're also responsible for maintaining an in-house staff to maintain and upgrade IP PBX equipment. The additional salaries, training costs and other additional overhead make this option a non-starter with many small businesses.
  • Relocating VoIP PBX equipment with your business can easily be an expensive and complicated task.

What Hosted VoIP Has to Offer

The biggest difference between hosted VoIP and its PBX counterpart is that it's completely hosted by a third party. That means no equipment to house (aside from your IP phones) and no additional overhead in the form of dedicated in-house staff. This makes hosted VoIP the smart choice for small businesses that don't want to or can't afford the additional expenses often associated with in-house VoIP solutions.

With a hosted VoIP, you pay a small fee for initial setup and a monthly fee for maintenance and upkeep. The amount of equipment that's needed is also kept at a minimum; all you'll need are a few desktop phones that plug into a nearby router. An offsite IP PBX server maintained by your third-party provider of choice handles all of the call switching and feature management.

If your business needs to relocate, you can easily do so without having to worry about moving expensive IP PBX equipment around. All that's needed is an Internet connection at your new location and a few changed settings.

Unfortunately, there are a few caveats to using hosted VoIP:

  • Hosted VoIP solutions tend to consume more bandwidth than comparative VoIP PBX systems. This could prove a minor technical setback for small businesses with a stake in carefully monitoring and controlling their bandwidth usage.
  • Adding new features and services isn't as straightforward as it is with a VoIP PBX system. Many third-party providers charge extra for service add-ons and additional users. Implementing custom features may end up a long and complicated affair, depending on your provider's expertise and capabilities.
  • If your hosted VoIP provider goes belly-up, you could be left high-and-dry until you find another provider. In the meantime, you're left with a gap in service.

Which Works Best for Your Small Business?

Ultimately, the choice between VoIP PBX and hosted VoIP systems lies with what your small business needs. If you already have the hardware in place, a VoIP PBX system can be a reliable and flexible tool for keeping your business in touch with its clientele and suppliers. A hosted VoIP solution offers fewer upfront costs, little to no overhead and constant availability no matter where your company ends up.