Hosted VoIP v’s SIP Trunking … debunking some common myths

With phase-out of UK ISDN services by 2025 now a reality, Voice over Internet Protocol (VoIP), is way past being considered a ‘fringe technology’ with Hosted VoIP and SIP Trunks being the practical and proven successors to that aged, expensive and inflexible telecom’s service.

When you look for a new VoIP telephone system, you’ll see two types of ‘supplier’ proposals;

Hosted VoIP

Hosted VoIP provides phone-sets at your office, with the ‘intelligence’ behind the call-connection and routing in a Media Server in a data centre out on the Internet. Your on-site phones will use your computer network and broadband to get to that ‘Cloud’ Server, and it’s the hosting company who is responsible for routing calls onward to local, national, mobile and International destinations using carriers of their choice. Examples of this are BT’s ‘Cloud Phone’ and ‘Cloud Voice’.

On-Premise IP-PBX

The alternative is to have your own VoIP Server (IP-PBX) – as part of your computer network at your office (e.g. 3CX or Yeastar). This server can support local phone-sets, as well as analogue, ISDN and SIP Trunk [VoIP] channels in an Internet connection. SIP Trunks are virtual lines carrying phone calls within a broadband Internet connection. The SIP trunks are hosted on an Internet based Media Server, but in this case, the Server simply routes calls to and from your IP-PBX which carries out all of the internal & external call routing. It’s up to you which carriers you choose to give you the best call rates.

“When I was a lad …”

You may remember ‘Centrex’ and BT’s ‘Featureline’ services. The idea behind these was to have a phone on each company desk, with a line connecting it back to a centralised exchange that provided the kind of features you’d expect to see from a private ‘switchboard’ e.g. extension to extension calling, conferences and call transfers. We sold a lot of PBX systems against this, simply because the typical business scenario (and it’s still the case), is that the number of simultaneous calls you need to connect, is a lot less than the number of extension phones you have on company desks! It’s only in Call Centres that you’ll see a need for a similar number of trunk lines as extensions! For that reason, Centrex systems were expensive to run because customers were renting a lot more lines than they needed to support their calling needs.

So – Here’s some reasons why Hosted VoIP may not be the ‘cheap’ option its presented as:

Hosted VoIP is presented as cheap to set-up, due to the capital cost of phones and network hardware being wrapped-up in the monthly per-extension (“per-seat”) rental. This may appear to be the case; But, in most installs we see that Capital Expenditure over the first 12 months for a Hosted VoIP system is much the same  (if not more), as a project quote for outright purchase of an on-site IP-PBX solution. The big difference between the systems being that in subsequent years, the running costs of the IP-PBX will be orders of magnitude lower due to the low rental cost of SIP Trunk channels, and extremely competitive call tariffs – while with a hosted solution, you just keep on ‘buying’ that system year after year.

Some Hosted VoIP system suppliers will not take your existing computer network into account, and will simply provide phones to plug into existing network switches and use your router to get to the Internet. This is ‘cheap’ because it removes any need to purchase networking hardware … But, when voice and data need to co-exist on a network, there does need to be some basic engineering done to accommodate that! If your network has not been engineered to support VoIP, then you risk poor call quality and loss of customers. This is an important consideration for both Hosted and on-premises VoIP systems. Some hosted VoIP suppliers may set up a second ‘separate’ network supporting your phones, and their Internet access. While this removes voice and data network issues, it also removes a lot of the cost benefits of being able to use a single large-bandwidth broadband service for Internet and telecom’s access, and removes ‘computer integration’ [CTI] features allowing your phones to work with Company contacts databases and CRM systems.

Hosted VoIP solutions lack the ability to provide Hybrid line systems. Where broadband is not available as a high-speed fibre service, it may be more reliable to have an on-premises system using SIP Trunk services that are backed up by analogue or ISDN lines. If you discover that your broadband is not as reliable as you thought, an IP-PBX may be fitted with ‘Gateways’ for alternative legacy analogue/ISDN line services, but hosted VoIP systems cannot provide this. They also make it expensive to rent ‘specialist’ extensions like door-entry units, Reception area extensions and Conference phones that provide a useful service but carry a lot fewer calls per month than e.g. the sales department extensions.

Hosted VoIP platforms provide onward connection to local, national, mobile and International services through carrier partners under service and tariff agreements with the hosting company. Therefore, the call tariffs are set by the hosting company, and you – the end user – have no ability to choose an alternate carrier to give you better rates to frequently called destinations. On-site IP-PBX servers can terminate multiple SIP Trunk service providers, and the IP-PBX can be configured to ‘Least-Cost-Route’ calls through those SIP Trunk groups based on the number dialled e.g. if you want services from a VoIP Carrier giving a better tariff to UK mobile numbers, then a SIP Trunk group can be added and calls commencing ’07’ can be dialled out that route. Recently, I was able to order and add a multi-channel SIP Trunk group & DDI numbers to an IP-PBX platform for one of my customers, providing them with a very large reduction in monthly call charges to mobile numbers – in less than an hour!

Hosted VoIP service providers must have longer-term contracts to ensure that they cover their investment in the central equipment and to cover the phones and network equipment they ‘gave’ you at the start of your contract. For this reason, you’ll see contract periods for Hosted VoIP that are three to five years, while SIP Trunk service prices are still very attractive with 12 month contracts on line and broadband, then monthly contracts on SIP Trunk services. Despite all the hype about ‘hosted’ being the cheaper option, this means that in real terms, your Hosted VoIP solution could cost you four to five times as much as an on-premises IP-PBX at the end of that five year contract!  A good revenue generation model for Telecom’s companies, but not cost-effective for the customer – i.e. you!

Some popular myths busted! …

On-premises IP-PBX systems WILL support remote office and home office extensions just as well as Hosted VoIP. Having an IP-PBX server doesn’t prevent or complicate remote working.

On-premises IP-PBX systems do NOT require on site networking and software management expertise to run. Modern systems run on platforms requiring minimal hardware maintenance with full remote support facilities included – so that when needed, the system vendor can make the changes that the customer requires from anywhere that allows him or her, Internet access. Hosted VoIP support is exactly the same … After all, your supplier doesn’t ‘live’ in the data centre do they! …

Just like hosted systems, it is quite straight-forward to carry out automated back-up of on-premises IP-PBX equipment, and to provide alternate hardware if there is an IP-PBX system failure. In the case of 3CX, we could even use a Windows 10 laptop while server hardware is repaired or replaced.

IP-PBX systems are typically much better integrated with your Local Area [computer] Network, and therefore, deployment of utilities to integrate PC desk-top directory and CRM app’s is much easier. While this feature is low on the list for purchase of a new VoIP system, we often see this as something that users enthusiastically adopt as they get used to the facilities provided by their new phones.

Pre-paid calling plans are VERY rarely of advantage to the customer. Low cost call-tariffs with billing by the second usually provide the most cost-effective billing for your outbound calls – Unless you are an out-bound call centre!

IP-PBX systems are just as scalable as hosted VoIP systems, allowing massive amounts of growth in lines and users without needing to replace central equipment.

And IP-PBX systems are just as secure as Hosted VoIP … In fact, a server supporting hundreds of telephone systems is more of a prize for a hacker to crack, than a single system.


Contact Foxhall Solutions at 01787 228 402 to discuss your best options for a cost-effective upgrade from ISDN services …

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