Hosted PBX is more than a political choice

The embers were still smouldering after last October’s federal election when the federal Liberals forced out their leader and launched another leadership race.

For Alexandre Plante, who’d been the party’s IT director during the election, that meant about a week’s rest before jumping into the political fires again, this time working for Toronto MP and leadership candidate Michael Ignatieff.

Plante’s mission was to quickly get a 40-seat phone system running, using handsets he purchased on eBay, for offices in Toronto and Montreal that would only be needed for a few months. His solution was a hosted VoIP phone service from a national provider, Iristel, which had the advantages of speed of deployment, adaptability, no contract and, after paying a set-up charge, a fixed monthly fee. “Had we gone with a regular [on-premise] PBX, it would have taken maybe two or three weeks to get the thing rolling,” he said in an interview. Instead, it took only three or four days.

“It was very flexible because we had to be on the same telephone network [between offices] and I don’t think it’s possible unless you have leased lines between the two systems.”

The flexibility was demonstrated when the Toronto office had to move across the street to Liberal party headquarters. It was done over a weekend without the need to reconfigure the phones. Meanwhile, because Ignatieff was soon running unopposed, the Montreal office was easily shut and its phones unplugged – an advantage of not having a contract.

“That’s an ideal case,” observed Bill Elliott, director of telecom design at Fox Group, a Mount Albert, Ont.-based telecommunications consultancy who oversees VoIP and PBX projects. Hosted phone systems are usually thought of as products for small businesses, but Elliott noted they can also work for organizations that have short-term needs — say, a retailer doing a special sale, or an accounting firm that needs a call centre around income tax time.

An increasing number of broadband and cable providers are offering hosted telephony, ranging from basic service for the SOHO market to enterprise call centres. “We’re seeing interest” from clients, said Jayanth Angl of Info-Tech Research, but only from a small number of organizations. Voice is mission-critical for most organizations, and broadband voice service doesn’t have the quality of service as a dedicated voice line. “That’s probably the reason a lot of people aren’t moving in this direction,” he said.

Those who need telephony tightly integrated with the rest of the enterprise infrastructure also shy away from hosted service.

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Some hosted PBX services can use existing office phones, while others insist their IP-based phones have to be used. Plans run the gamut from a unlimited local calling for a flat fee to metered-by-the-minute service. Long distance fees are extra. For example, Iristel charges $44.95 a month for a PBX system, plus a $79.99 setup fee. Each person with an extention cost $2 extra. Certain features are an extra $2 each per user, except voicemail, which is $4 a person. Auto attendant capability, to take the load off or replace a receptionist, is $29.95 a month extra, plus a $149.99 set up fee. On top of that, Iristel charges $19.95 a month for each phone line.

Because Internet-based service can be ubiquitous, even U.S.-based providers can look offshore for customers. One is Virtual PBX, a San Jose, Calif.-based operator that says it has “fairly significant number” of Canadian customers. This week the company announced an unlimited $10 a month plan for subscribers who use the SIP-based Gizmo5 softphones. Other plans go up to US$94.99 a month for 50 users, which includes 2,000 local minutes. All plans include auto attendant.

“We find an awful lot of our Canadian companies either want to use a U.S. toll free number [which is extra] or they want to look like they’re in New York or Los Angeles and so they’ll use a local U.S. number,” said COO Greg Brashier. On the other hand, he acknowledged that his service isn’t suitable for regulated organizations here that have to keep control of data – including anything that touches the communications system. Virtual PBX’s servers are in the U.S. Another U.S. provider inteiviewed last year by Network World Canada is Jajah.

Elliott of Fox Group says the consultancy recommends organizations do a cost analysis before choosing hosting over on-premise solutions. “Hosted services are not necessarily a bad thing, but ensure you apply them to the appropriate situation,” he said.

There are a number of factors to keep in mind: Who supplies the phones and the phone lines? Is an auto attendant included or an extra fee? Is conferencing included? Is it easy to transfer calls? Do you have to sign a contract? What costs extra?

Generally, hosted services can be advantageous for growing companies who want business spending to be listed as an operating rather than a capital expense. On the other hand, Elloitt said, organizations with stable growth and sufficient capital should favour in-premises PBXs. There are tax implications as well, he added: An operating expense is written off the year it’s incurred, but capital costs are depreciated over time. However, he cautioned that one thing to keep in mind is that contact centres require more IT support than ordinary office workers.

Fox Group did a comparison for a customer looking for call centre alternatives, and found that a hosted offering was more advantageous for fewer than 50 agents.

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Jim Love, Chief Content Officer, IT World Canada

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Howard Solomon
Howard Solomon
Currently a freelance writer, I'm the former editor of and Computing Canada. An IT journalist since 1997, I've written for several of ITWC's sister publications including and Computer Dealer News. Before that I was a staff reporter at the Calgary Herald and the Brampton (Ont.) Daily Times. I can be reached at hsolomon [@]

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