Where Hosted PBX Solutions Save

Business telephone systems range from the very simple with a few phones and a few lines to complex private branch exchanges that support multiple sites. The new approach is a hosted PBX that makes things simple again. But do hosted PBX solutions really save anything and can they maintain voice quality?

With the simplest arrangement of a single landline phone connected to the local phone company, there really isn’t much to manage. You pay so much per month for “dial tone” that makes your phone work and gives you typically unlimited local calling. You have the option to switch to a different provider for long distance service or use a dial-around service for international calling. These are options to save you on the per minute calling rates.

The basic analog or POTS (Plain Old Telephone Service) phone service seems simple because all the complexity is at the other end of the wire. What you don’t see or have to deal with is the intricacies of connecting your line to any of billions worldwide or to even more billions of wireless callers. If you have, say, 3 business locations with 1 phone each, they talk to each other by dialing up the desired location just like any other phone number.

Businesses found out just how complex the PSTN (Public Switched Telephone Network) was when they got big enough to have lots of desk phones and a dozen or more outside lines. What many companies did was to buy their own telephone switching system called a PBX (Private Branch Exchange.) The advantage of having your own PBX system is that calls within the company stay on your own wiring and you don’t have to pay the telephone company to connect them. That includes more complex PBX arrangements with digital tie lines that connect multiple locations in a private network. Once again, the motivation is to keep as many calls as possible off the public network to avoid “toll” charges.

Many companies have rued the day the got into the telephone business. PBX systems are expensive to buy and need constant updates as employees move within the company. There is also maintenance activity for both the PBX and its telephone network wiring.

Hosted PBX is a fairly new service that offers to offload the expense of in-house phone systems. It only became possible when most companies installed Local Area Networks for their computers and the price of private digital lines became affordable. The enabling technology is VoIP or Voice over Internet Protocol. In this case, Internet refers to the technology standard and not necessarily use of the public Internet.

Hosted PBX refers to using a large PBX telephone system that is located or hosted by a third-party service provider. This PBX is big enough to handle the telephone traffic of many different companies to gain an economy of scale. In a way, this is similar to going back to the days where each phone was individually connected to a local telephone company that took care of call switching.

So, where does the cost savings come from? Network consolidation is one area. Both telephones and computers run on a single converged voice and data network. There are no separate telephone wires. This network is extended to the hosted PBX provider using a private digital line called a SIP trunk. You are not tied to a particular service provider. There are many competing hosted PBX solutions and that competition is another way that cost savings can be offered.

The private SIP trunk helps to maintain high voice quality because it provides the characteristics of low latency, jitter, packet loss and congestion, along with quality of service mechanisms that keep data packets from interfering with voice packets. You can also buy Internet based hosted PBX services at lower costs, but the vagaries of the public Internet can introduce distortion and clipping in the conversations.

Do hosted PBX solutions offer a real cost savings for your company? It depends on how many seats you have, what features you want and what your existing system is costing you. If you are close to replacing an aging PBX or one that has run out of capacity, the economics highly favor hosted solutions. To decide for yourself, get competitive pricing on hosted PBX solutions for business. It may come down to whether you want to pay as you go versus investing in your own in-house phone system.

Local Telephone Service Provider Options

Every home and business needs local telephone service of some sort. Not so long ago, the solution was simple. Just call up the local phone company and make an appointment for them to come and install a telephone set or a dozen. Nowadays there are more options and more decisions to make to ensure that you'll get the best deal possible.

The traditional local phone service or "dial tone" service is the same analog technology that's been around for 100 years. The technology is well established. The required copper pair wiring has been pulled into nearly every building in the United States. You can still walk into a local telephone company office and request service. But you might do better to consider offers from both the incumbent local exchange carrier and competitive carriers that have established themselves since deregulation made this possible.

Analog phone service is a viable option for residential, home office, and small businesses that need only a single line or a few lines. But once a business is large enough to have more than half a dozen outgoing lines, there are digital options that start to look more attractive. Integrated T1 line service gives you telephone and broadband as a bundle with a price that may be better than buying them separately. A full T1 line or ISDN PRI service offers up to two dozen phone lines. These are commonly used with PBX telephone systems connected to phones throughout the company. Check prices on digital phone service options to replace analog lines.

VoIP or Voice over Internet Protocol is a digital service that is even newer than T1 "digitized analog" phone service. The technology is designed to mimic the format of computer data packets so that it runs on commonly available broadband services such as DSL, Cable Internet, and T1 Dedicated Internet. A regular analog phone plugs into an Analog Telephone Adaptor provided by the VoIP supplier to make the broadband connection.

A popular ultra-low cost residential service is MagicJack. This company provides an ATA that's about the size of a pack of cards and plugs into a USB connection on your broadband connected PC to get access to the Internet. The computer needs to be on to use the phone, although incoming calls will go to voicemail when the computer is switched off.

Other VoIP providers offer a stand alone ATA that connects to a broadband router or modem and doesn't require the use of a PC for phone service. The phone is active as long as there is an active broadband connection. There are many competing services available today. Use this Affordable VoIP Service Finder to compare offers.

Larger companies use enterprise VoIP solutions that are based on private line or network connections that do not use the Internet. An service growing in popularity is SIP trunking, a digital line service based on the Session Initiation Protocol that is common to many VoIP systems, including IP PBX systems that manage multiple phone lines and handsets.

An increasing trend among younger phone users is to make their cell phone their primary telephone, perhaps to the exclusion of a landline service. For those who are on the go a lot, including independent sales professionals, the ability to make and receive calls anywhere has a lot of value.

The latest phone models include a high resolution digital camera, the ability to download and play videos and full HTML Internet browsers, as well as multiple messaging options that include email. It's not inconceivable that some individuals may be able to use their smartphone as a substitute for even a desktop or laptop computer, as well as a traditional fixed location telephone. Compare cell phones and wireless plans to see if any of this makes sense for you.

PRI vs POTS Telephone Service

Business telephone systems range in size from single line desk phones through enterprise telephony with hundreds or thousands of handsets. Chances are that your business needs are somewhere in the middle. But where? What is the right service for you?

The most basic and traditional phone service is called POTS or Plain Old Telephone Service. Chances are that you won't see it advertised that way. Instead it will be called business line or dial tone service. What you get is an analog connection to the nearest telephone company Central Office or CO. Any conventional telephone will plug into the RJ11 jack on the wall and give you dial-tone when you lift the handset. You can expand the number of rooms with phones by paralleling twisted pair wiring to other phone jacks. But you still only have one line and, if it is in use, no one else can make or receive calls.

Basic POTS is local phone service. Long distance service is either bundled for a single price or assigned to a competitive long distance carrier that offers lower per-minute rates on separate billing. Caller ID is an add-on service that is multiplexed on the same phone line and displays the caller's phone number and other information on phones with the necessary display, or a separate Caller ID unit. Toll free service can be added to forward incoming calls from a toll-free number to your phone line.

A logical upgrade from POTS is to add a separate identical line service and use a two-line business phone. These are commonly sold in office supply stores and can work well for small offices. Such phones are entry level Key Telephone Systems. What distinguishes a key system is that there are buttons or "keys" on each telephone to select the desired phone line. These buttons flash to indicate the line is ringing with an incoming call or light steadily to show that line is in use. Larger key systems can handle a half-dozen separate phone lines.

Businesses with 6 or more outside lines are likely to switch to a PBX or Private Branch eXchange phone system. Like the name implies, this is a mini telephone company office on your premises. Once giant racks full of equipment, the modern PBX may be just a small box that sits on a shelf in the telephone closet. PBX systems work differently from Key systems. The PBX manages all the phone lines for incoming and outgoing calls. It also interconnects all the telephone handsets so you can dial from phone to phone inside your building without incurring any telephone line charges. When you need to make an outside call, the PBX system will assign you the next available line. You don't really need to know which one it is, they all work the same. Callers can directly dial a number for your phone, called DID, or reach an automated system where they can enter your extension number. The PBX will then ring your phone.

Up till now the phone lines we've been discussing for all of these different telephone systems are individual analog POTS lines. You pay for each one separately and the total cost is generally the cost per line time the number of lines. Once you need 8 to 12 lines or more, it usually makes economic sense to switch to digital trunk rather than use multiple analog lines.

The digital trunk, called a T1 voice line, converts up to 24 separate phone lines into a single digital connection between you and your phone service provider. The most popular variety of T1 service is called T1 PRI or Primary Rate Interface. It is also known as ISDN PRI for Integrated Services Digital Network. The difference between a T1 PRI line and a T1 voice line is that the PRI protocol establishes one channel of the 24 as a switching and data channel. This makes calling faster and allows you to have Caller ID for the other 1-23 channels or 1 to 23 outside phone lines.

If your phone system has grown over the years to a dozen or two dozen analog phone lines, it's time you got a competitive quote for T1 PRI lines service. Connecting PRI to your PBX system usually involves plugging-in a special interface card if your system doesn't already have one. Many new PBX systems come with this connection feature.