Business Phone Solutions Buyers Guide

Discover the differences and the similarities between business IP phone systems

By Sheila Shanker
Updated: May 13, 2011

Many small businesses can now take advantage of latest technology related to phone services, such as “VoIP,” also known as “voice over Internet protocol” system. This type of technology uses the Internet to carry voice as well as video along Internet connections. If you have the proper Internet connection, you can take advantage of this phone service, which has become very popular, not only because of the affordable price, but also because it offers quality and flexibility not found with regular phone service.

In House VoIP vs Hosted VoIP

Internet protocol business phone systems (IP phone systems) can be classified as in-house exchange systems or hosted exchanged systems. The main difference between these two is that the in-house option usually includes ownership and maintenance of the exchange system, while the hosted version is about having a third party take care of the exchange system. Some hosted plans may include desk phone systems, such as the one offered by, which is owned and managed remotely by the hosting firm.

The main similarity among all IP phone systems is that they use the Internet to carry voice packets, and you will need a very good Internet connection to be able to utilize the phone setup. Depending on your situation, you could add video and conduct video-conferencing on both in-house and hosted systems. Functionalities on both types of systems are quite similar.

However, let's not forget the differences!  If you get a hosted system, you may need to be pay extra for new users. Also, if you need a highly customized solution, you may not be able to get it with a hosted service. You may save money upfront and in maintenance with a hosted solution, but you may lose some control over the process. Many small businesses start with a hosted system and then move to an in-house setup, that is more expensive, but gives firms more options.

Reliability of Hosting Company

Another important issue of the hosted setup is that if the hosting firm goes out of business, you have no phone service – you don’t have this problem with an in-house system. When selecting hosted services, be sure that the hosting firm has a good reputation and is stable. You don’t want to rely on a fly-by-night firm to be responsilbe for your phone service. Check out the Better Business Bureau for any complaints or indications that the company may not be around for the long haul.

An often-forgotten issue of a hosted environment is security. When you use a hosted system, you have outsiders dealing with your phone calls, and you’re not really sure who is listening to your conversations or conferences. The risk of unauthorized eavesdropping or hacking is much smaller when you have an in-house system where you control who has access to the system.

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