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Picking From the Plethora of Hosted VoIP Providers

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January 30, 2008

Picking From the Plethora of Hosted VoIP Providers

By Phil Hill, Co-Founder, President, Vocalocity

The number of companies launching hosted VoIP offerings is increasing exponentially — with everyone from start-ups to ISPs jumping on the bandwagon and hoping to get a piece of the action. And it’s no wonder, since the action is predicted to be huge. According to AMI Partners’ 2007 survey of small businesses, hosted VoIP spending is expected to increase from $236 million in 2006 to $1.4 billion in 2010, representing a compound annual growth rate (CAGR) of 57%.

VoIP and hosted VoIP in particular are making small businesses an offer they can’t refuse: reduced phone system costs and a wealth of professional features that let even mom-and-pop shops appear to the outside world as a major corporation. Businesses can now alleviate the financial and management pain of buying and running phone equipment on site since all of this is borne by the service provider.
While adopting hosted VoIP as a business phone system is a no-brainer these days, researching options and selecting the appropriate provider can be overwhelming for micro enterprises. Bombarded with offers — each claiming to be the cheapest and best — these businesses need a way to separate the wheat from the chafe when looking at hosted VoIP providers.
Start by Looking at Experience
The good thing about VoIP is that it has slashed the cost of setting up and running a business phone system. The bad thing about VoIP is that the very same benefit has provided a written invitation for every man and his dog to play at “let’s be a phone company.” The growing popularity of open source software (think Asterisk (News - Alert)) makes it pretty easy to do a bit of programming, set up some servers, and cut a deal with an origination/termination provider — and voila, you’re in business with a hosted VoIP solution. Today, nearly anyone can claim to offer a hosted VoIP service, but few offer the expertise and experience to create a business-class product.
That’s why only companies with proven track records and experience in hosted VoIP should be making a small business’ short list. After all, cheap doesn’t mean inexpensive if poor quality and service brings down a company’s phone system.
VoIP as the Core Business
Another way to separate the leading providers from those jumping in to make a quick buck is to determine the extent of the company’s commitment to hosted VoIP. Is this the core of the business or simply an add-on service thrown into the mix?
For instance, many ISPs looking to boost revenue have entered the hosted VoIP market without completely comprehending the difference in technical and customer support requirements involved in supporting voice as opposed to data. As a side business, the ISP doesn’t have to excel in hosted VoIP. It’s simply an additional revenue stream from existing data transmission customers. Likewise, the demands of running a hosting business that offers Web and e-mail services does not compare to the set-up and management of a hosted phone service which has many more technical complexities and intensive support needs.
Small businesses should look for providers whose core business is VoIP and are focused on delivering reliable, scaleable business communications services.
Don’t Underestimate Customer Support
Companies new to voice and VoIP generally underestimate the level of support customers need — particularly small businesses — to be successful with VoIP as the basis for business communications. The typical small business, lacking in-house technical expertise, needs to know that its provider is there batting for them 24x7.
In fact, one could argue that with voice communications being critical to the business, the responsiveness and quality of customer service could be the most important factor in the selection of a provider.
It Takes a Good Backbone
It’s relatively easy to offer a hosted PBX and put up a Web site advertising the service. It’s considerably harder to put together and maintain all the enterprise-class bells and whistles needed to ensure reliable service. Legitimate providers will have a proven, enterprise-class backbone with a fully redundant architecture that ensures customers will not be without service.
The Quality Question
While there’s considerable discussion about what exactly constitutes business-class VoIP as opposed to consumer-level VoIP, one thing is certain: the quality of the call will directly impact your customers’ opinion about your business. For small businesses in particular, they need providers who really, truly understand how to establish reliability for voice and data and conduct due diligence with customers to help them ensure quality of service.
And beware the wolf in sheep’s clothing: that is, the residential VoIP provider who takes a turn at the small business market. The technology used for the residential VoIP market is normally not business grade; for example, Vonage (News - Alert)-like phone adapters and old school analog phones are typically used instead of business-class, SIP Internet phones. Small businesses should choose a provider who concentrates solely on the business market, particularly the small business market.
The Bottom Line
Over the past two years, many companies have entered the hosted VoIP market. And many have left. Setting up a reliable network, offering knowledgeable and attentive support, and keeping the attention of origination/termination providers is a tall order that only the committed and focused hosted VoIP providers are prepared to fulfill. Small businesses would do well to look beyond simply comparing monthly fees and determine the true value of finding a partner who’s here to stay in the VoIP market.
About The Author:
Phil is an experienced entrepreneur in the Internet space and has over 10 years experience building and developing businesses, including start-ups and established operations. Now co-founder and president of Vocalocity, a hosted PBX (News - Alert) provider for micro enterprises, he was a co-founder at Netzip, which was sold to Real Networks in January 2000 for $267million after it created the de facto standard for downloading media files on the Internet. After the sale he assumed the role of VP Marketing at MusicNet, a wholly owned subsidiary of Real Networks, where his team innovated some of the first legally deployed music subscription services which are now in use by Microsoft, AOL (News - Alert) and Yahoo.
About Vocalocity (News - Alert):
Vocalocity (News - Alert) is the leading provider of Voice over Internet Protocol (VoIP) communication services to micro enterprises - companies with fewer than 20 employees. Vocalocity’s core offering, VocalocityPBX, is a hosted service providing customers with the quality and reliability of traditional PBX phone systems, with more features, flexibility and cost savings. For more information about Vocalocity, visit or call 678.528.9000.

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