Hosted PBX lets small businesses act big

What to look for out of hosted PBX services.

One of the latest spinoffs of VoIP telephony is the Internet hosted PBX system. Small to medium sized businesses with as few as 3 phones can now get the really fancy business telecom services without having to mortgage the farm for a big time PBX system or even a VoIP based PBX system. In fact, you'll never see any PBX equipment at all because its being run by a service provider just like a Web hosting service.

Internet hosted PBX could be a stake in the heart to traditional high priced business phone systems. Smaller businesses like retail stores, doctors offices, immediate care clinics, real estate offices, insurance sales, and stock brokers have always had the heartburn of deciding when to give up on cheap and simple single or dual line phones and pony up for multi-line key telephone systems or a small PBX.

The problem with key telephone and PBX systems is that they are capital intensive and require regular maintenance. You have to make a good guess regarding how much system to buy, and then pull wires to all the desks and install the central processor and phones. Guess too low and you'll be ripping out your system to put in a bigger one. That's euphemistically called a fork lift upgrade. Get overly optimistic about your growth potential and you'll pay out the nose for capability you won't need for years, if ever.

The Virtual Office by Packet8, for instance, now offers an interesting alternative. You don't invest capital in a phone "system" at all. Instead you buy phones and phone service. Each phone has unlimited local and long distance calling to the USA and Canada, just like a residential bundle. But, since the phones are part of a virtual office phone system, they can call each other with 3 digit extension numbers, transfer or conference-in other parties, forward calls to another phone, pickup any ringing phone from any other, access voice mail, have music on hold, be serviced by an auto-attendant, and be controlled by a receptionist console if desired.

Those sound like regular PBX features, don't they? This hosted service goes further, though. It includes a conference bridge with up to 20 participants. You can add virtual phone numbers and assign them to any area code. Typical of IP based telephony, calls to extensions or other Packet8 subscribers can be anywhere in the world at no extra cost. That's because they stay on the Internet. When a call exits the Internet to a public phone system overseas there's an extra charge, but it's lower than what you'd typically pay for overseas long distance calling. Direct Inward Dialing, DID, is standard for reaching any of the extensions. The only things missing are support for FAX, E911 and 411 Directory Service, but Packet 8 plans to add these in the near future. Meanwhile, you might want to hang onto one local loop to supply these functions for your office.

What really sets this approach apart from key systems, PBX systems or even Centrex service is the costs. At this writing (January 2005), you pay $39.95 a month for each unlimited local and long distance extension. There is also a one-time charge of $99 for a business speaker-telephone with the necessary soft keys and display screen and broadband adaptor, plus shipping and activation. Virtual phone numbers, toll free numbers and switchboard software are extras but they're pretty low cost compared to what you're used to seeing. What you really need to do is compare these prices with what you pay now for local loops, long distance charges and equipment costs. Packet8 makes it easy to do what-ifs with its online calculator called the "Virtual Office Quote Tool." Find complete details about the Packet8 Virtual Office here.

Since this is a VoIP service, you'll need broadband Internet access for the Virtual Office extensions. If you only have a few extensions, you can probably get by with the DSL or Cable Internet service you are using for your computers now. If the broadband load gets excessive or you want higher reliability Internet service, consider a fractional T1 line or even a full T1 line.

Editor's note: If you are interested in this type of product you might also want to examine BroadSoft Hosted PBX, Virtual PBX, and Eureka Networks Hosted PBX.


T1 Rex's Business Telecom Explainer offers easy to understand information about complex telecommunications and networking technology. T1 Rex explains how T1 lines work, VoIP telephone, PBX, virtual private networks, digital audio transport, Wi-Fi & WiMax, fiber optic carriers and other business telecom services.

John Shepler has been a published writer for over 30 years. With a background in electronics engineering technology, he has worked in a variety of industries including radio broadcast, aerospace and manufacturing. Involved in telecommunications since 1998, he combines his interests in writing and technology with T1Rex.com and T1 Rex's Business Telecom Explainer.

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This was first published in May 2005

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