Making The VoIP Call

Hosted VoIP Solutions
The easiest option is to go with a hosted service. And for some customers, solution providers find it just makes more sense to use a hosted service from vendors such as 8x8, Covad or M5 rather than installing premise-based systems, particularly for small clients. Like Centrex services in the legacy phone world, hosted IP voice systems are ones in which the routing equipment is located remotely. In the case of newer services, the connections in and out of a building are IP-based.

"Once they look at the benefits and the costs annually, in most cases, it's a no-brainer," said Adam Eiseman, CEO of Lloyd Group, a New York-based solution provider that partners with M5.

Hosted VoIP services are useful when parts of a company are situated in dispersed locations with each one having only four or five phones. It would be impractical to install an expensive phone system in every location. Instead, a cable modem or DSL connection, along with a bunch of IP phones, are all that's needed. The hosted service then provides all the functionality such as voice mail, call forwarding and transfers, and even when lines are located in different parts of the country, it is completely transparent to callers.

Customer benefits from a hosted system include easier mobility and survivability in the event of disaster because none of the important phone equipment, save for the phones themselves, is located on premises. It also makes it more economical to set up temporary phone systems. Another benefit is that there are little or no startup costs.

Solution providers stand to gain a similar benefit. Since there is little on-site equipment and the service provider is responsible for quality, some VARs have found that offering hosted VoIP services is the fastest way to build a profitable IP telephony practice. Such partnerships typically require little up-front training and offer recurring revenue streams.

"It allows you to get into it and almost profit from day one," Eiseman said. "We also sell Cisco phones and infrastructure [to support the service] at a comfortable margin."

Another key benefit to both partners and their customers is that they often get more attention from the smaller hosted VoIP providers. "You're getting rid of Verizon. You no longer have to deal with them,"said Benjamin Irvine, CEO of Octopus Networking, another M5 partner in New York. "You can now have a smaller customer-focused group that's focused just on you."

According to David Immethun, senior director of sales at 8x8, more than 6,000 businesses are now using the Packet8 Virtual Office service, and hundreds of new customers are joining each month. "Hosted is better for SMBs because the TCO is easiest to calculate, compare and substantiate," Immethun said. "You don't have to purchase any expensive equipment. All you need is broadband."

The Packet8 Virtual Office service, for example, costs $40 per user, per month for unlimited calls throughout the U.S. and Canada. Another package costs $20 per user, per month for 250 minutes with unlimited inbound calls. The phones cost $100 each, or they can be rented for $10 each per month, thus eliminating any up-front costs. Solution providers that want to set customers up with the Packet8 Virtual Office service get an inside sales rep, single payouts and residuals. According to Immethun, they can earn up to $10,000 for signing up a 100-user site.

A hosted service breaks geography limitations, as virtual lines can be set up anywhere. Each extension gets its own number, and additions, moves and services are all included. New features are added for free as they become available as customers have no IP-PBX to upgrade.

Getting the Packet8 phones set up is easy. Existing Ethernet wiring and routers can usually be used. A QoS router is recommended, but 95 percent of 8x8's customers don't have a QoS router. Old hubs often have to go, as they are known to cause packet collisions. The Packet8 phones plug into an Ethernet port, and PCs and other equipment can plug into the two Ethernet extension ports on the back of the phones.

While some partners said they have customers with up to 350 users happily existing with hosted VoIP services, others say they prefer to limit rollouts to much smaller firms. "If you've got 12 phones in three buildings throughout a metropolitan area, hosted may work for you," Goldstein said. But once users get above 25 phones, he said, it makes sense to own an IP-PBX.

Some solution providers shun the hosted VoIP path entirely because they don't like the loss of control. "We have a philosophy here that we like to put the success of D&D in the hands of D&D," Labatt-Simon said.

All Paths Lead To IP Telephony
Regardless of the path they take, many solution providers are in agreement that IP communications is the way of the future, and that building a VoIP practice is essential to their survival.

"You won't exist in three to five years if you don't build your focus on routers, switches and IP telephony," Goldstein said. "Your business will be declining, declining. I see it with my peers. They're moving into smaller offices."

For Goldstein and solution providers like him, it's the path toward IP communications that has made all the difference.

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