Business customers are now adopting and considering Voice over Internet Protocol (VoIP) telephone systems. One interesting option, hosted IP, is similar to traditional Centrex where the hardware and software for voice telephone systems is located at the carrier instead of customers' premises. This solution is of interest to customers who do want to commit to purchasing VoIP hardware, are too small for in-house expertise, have a robust internal network or are uncertain about their growth.

Connections
Customers that use a hosted PBX instead of an on-site telephone system are connected to their hosted system via a high-speed connection such as a T-1 or DSL line, which transmits calls, voice mail messaging and other signals between the VoIP provider and customer. VoIP compatible Telephone sets used with the service are plugged into the same customer network used for data.

Handsets
Depending on their provider, telephones are either mailed to customers or installed by the provider's technicians. When customers need new telephones, their provider generally mails them out. The telephones have multiple buttons and a menu driven screen with features such as the ability to scroll through a call log or change where calls are routed, e.g. to a mobile phone or home office.

Features
In addition to local and long distance calling and standard features, users have PC based graphical Web interfaces for:

• Audio conferencing activated via PCs. Conference leaders can add, drop and mute participants by clicking on icons.
• An integrated mailbox on PCs with access to voice mail, email and fax messages so that users can access all messages in one place.
• Instant messaging between the organization's employees with graphical indications of each user's availability.

Voice quality and security
According to Howard Freidman, CEO of Aptela, a hosted PBX provider in Virginia, poor voice quality caused by inadequate capacity on internal local area networks is the biggest problem users experience with VoIP hosted PBXs. For acceptable quality as well as security from hackers, customers implementing a VoIP solution need:

• Data quality cabling
• Routers capable of prioritizing voice
• Data switches with both adequate speed and software to identify telephony devices for special treatment

Business Continuity
Locating telephone system hardware and software at a provider's site adds an extra layer of survivability if an organization loses their electricity or experiences a disaster or act of terrorism at their office. If the provider's site is operational, employees can make and receive calls from remote sites. In addition, if an organization's data network crashes, people can receive calls from mobile or home phones.

Who offers hosted IP service?
Covad, which concentrates on locations with 20 to 200 users, has the largest installed base of hosted IP PBXs. Packet8, MCI, PingTone, M5 and AT&T (the former SBC) also sell hosted IP service. Verizon will announce its hosted IP packages in 2006. Companies such as Packet8 and Aptela sell mainly to the under twenty-line market.

Benefits of outsourcing
In addition, to disaster recovery and flexible sizing, customers avoid training staff to maintain new systems and can take advantage of features such as sophisticated call centers and one unified voice mail service for all company sites, benefits often affordable only to large customers. The success of hosting often depends on the provider's capabilities and network quality.