Hosted VoIP has its advantages, risks

By Jim Rendon, News Writer 13 Oct 2004 |

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LOS ANGELES -- Carriers are offering low-maintenance hosted VoIP services for enterprises, but hosted services aren't exactly problem free, according to participants in a panel discussion at last week's Internet Telephony Conference & Expo.

VoIP services can help reduce the complications and capital expenses associated with enterprise IP telephony. Today, six carriers are offering VoIP services or will launch them in the future. Though AT&T's consumer CallVantage service has received the most press, there are several carriers offering services tailored to small businesses.

It's the newest segment of a hot VoIP market, which is expected to grow dramatically over the next five years, said John Wind, senior director of marketing at Orlando, Fla.-based Volo Communications Inc., a reseller of VoIP services to carriers.

Carriers are now able to offer a host of business-friendly features, including unified messaging and a few others that one might not expect to see at the top of anyone's list of must-have services.

"Seventy percent of businesses want to have music when they put people on hold," said Rich Grange, CEO of Golden, Colo.-based New Global Telecom Inc. While that may seem frivolous, Grange said that a business can easily record a message and post it to a Web site that will allow the carrier to play it when customers call. He said it is an inexpensive way to easily convey information to customers.

Businesses also appreciate the simplicity of receiving one bill for local, long distance and WAN connectivity, Grange said.

But hosted VoIP appeals mostly to small businesses, said attendee Stan Little, vice president of consumer marketing at Campbell, Calif.-based Sylantro Systems Corp., which provides hosted communication services for carriers.

Most enterprises have already spent large sums on their infrastructure, and adding an IP PBX -- the key component for internal VoIP -- to the mix is not a significant expenditure, Little said. But he said smaller businesses or those with multiple small remote sites can benefit from a hosted VoIP service.

"It allows them to appear like a large, centralized business," he said.

But VoIP is still a relatively new service. Data networks were not designed to carry voice, and Grange said that can lead to quality issues.

"The stability of the hardware out there is not as robust as the telecommunications infrastructure," Grange said. "A Cisco gateway is not as robust as a Nortel switch."

When a carrier deploys hosted VoIP, it needs to not only make sure that its network is up to the job, but also ensure monitoring of both the network and call quality.

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Another twist is that new VoIP features are being developed all the time, so carriers need to pay extra attention to ensure quality. "The technology has reached the point where it is mature, but it is not as robust as it needs to be," Grange said.

In addition, carriers are getting into a new business with hosted VoIP. They will now have to install VoIP phones and support the necessary devices, which add a new element to their business. One major carrier that Wind would not name recently had significant problems with its hardware fulfillment, he said.

Businesses should also be aware of how calls are routed. For example, Wind said one business he worked with had local offices in China, but when they called each other they had problems with latency. It was because calls to relatively nearby locations in China were routed through Orlando.

Faxing has also been problematic said Wind.

But as VoIP continues top grow and mature, it will certainly become the norm in most businesses, Grange said.

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