How to Choose a VoIP Provider for Your Small Business

A variety of providers want to relieve your company of the burden of owning an IP PBX.

These days, small businesses have to perform like big ones in at least two ways. First, they have to appear big to their customers. Second, they have to possess the communication capabilities and efficiencies of large companies. IP PBXes of one sort or another will surely give your competitors both of those benefits, and probably sooner rather than later. So if your company doesn't adopt IP telephony, it will put itself at a competitive disadvantage.

The hard part is finding the IP PBX that fits both your company's needs and its budget. That's where the choice between on-premise and hosted IP PBXes comes in. Going the on-premise route requires buying and operating equipment, while hosted means using VoIP service delivered from an IP PBX in a service provider's datacenter, with the calls transported over the Internet.

Using a hosted service can help you avoid some of the significant disadvantages of buying your own PBX. The most obvious disadvantage comes "if you have 10 people and have to make a $2,000 to $4,000 investment," said Infonetics Research analyst Matthias Machowinski. "PBXes have a certain base price, so there's going to be the up-front investment, and you have to manage it, too." Another disadvantage appears if your company is expanding rapidly. "If you don't know how big a company you're going to be a year or two down the road, if you invest in a PBX with 50 seats, you could outgrow it," Machowinski added.

Hosted VoIP, by contrast, allows a company to add just the capacity it needs at any given time. And if your business does go with hosted VoIP, it will have a lot of company. According to Infonetics Research, there were 2 million of what the research firm calls "IP Centrex seats "worth $1.1 billion in revenues in the U.S. in 2007. Infonetics Research expects the number to more than double to 5 million seats worth $2.5 billion in 2010.

Your business will also have a lot of choices to make. The range of VoIP providers varies widely. At one end are those that deliver calls over the public Internet. At the other end, some providers control the IP links all the way to your company's premises. The provider may actually own and operate those links, or it may buy them from companies that do. Public Internet delivery is obviously cheaper, while provider-controlled access offers more consistent quality. And there are myriad variations on the two.

by Robert Poe
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