There is a conversation that I seem to be having more and more often as I discuss hosted phone systems with clients.
The conversation centers around a misunderstanding among business owners as to what “VOIP” signifies. This problem is not the fault of the business owners, it’s the fault of the technology industry. Technology companies found it easier to throw “VOIP” around when discussing phone systems when what they were really trying to specify was “hosted.” There is a distinction that is slight, but important to understand.
First of all, a phone system that is hosted is
VOIP. But a phone system that is VOIP does not have to be hosted. I will explain the differences.
What Is “VOIP”?
“VOIP” is an acronym that stands for “Voice Over Internet Protocol.” You may be familiar with the phrase “IP address.” This is the same “IP” as in “Voice Over Internet Protocol.” What this means for a phone system, at a very simple level, is that your phone system is going to use IP addresses that are attached to the physical phone handsets to keep track of what phones are on the system and who they belong to.
In the old days, with a true analogue phone system, the system only knew which phone was which by the port it was plugged into in the physical voice switch.
For example: John and Julie are in cubicles right next to each other in the office. John’s phone is connected by a physical cable to port 3 on the voice switch.
Julie’s phone is connected to port 4 on the switch. Under an analogue phone system, if I unplugged Julie’s phone and took it over to John’s desk and plugged her phone into his line.
Julie’s phone would start getting Johns’s calls. John’s phone number is directly tied to the specific port on the switch. Whatever phone is plugged into that port, get’s John’s calls.
Under “Voice Over Internet Protocol,” the IP address that is tied to the phone handset itself determines who’s phone it is and what calls it gets. Under a “VOIP” system, if Julie picks up her phone, takes it to John’s desk and plugs it in, the phone system knows that it is still Julie because it is looking at her IP address, not just the port she’s plugged into.
Her phone will ring at John’s desk or anyone else’s desk and her phone will still have her voicemail's.
Obviously, this allows for much greater flexibility and ease-of-use in system programming and office layout.
There is another benefit to the “VOIP” system and that is the ability to connect to the switch without an actual cable connection. It is still a faster and more stable connection to utilize an Ethernet cable, but it is possible to network your phones to your switch on your local area network and not have to use physical cables.
Okay, so that is what “VOIP” means.
What Is “Hosted?”
“Hosted” refers to the transmission of your phone’s dial tone over the internet rather than through a more traditional phone line such as an Analogue line or an ISDN2e circuit. Internet phone lines are called SIP Trunks.
The term “hosted” refers to the fact that under a hosted phone system, the actual brains of the phone exist in a data center somewhere and not in your office space. The phone system is accessed by your phones through the internet. Your phone system is “hosted” by someone else in the “cloud.”
Why Make A Distinction?
So now you understand that “hosted” and “VOIP” are not the same thing. But why does that make any difference?
Well, back in the early 2000’s, “hosted” phones were launched as a bleeding edge technology. They promised significant benefits and were hailed as the next big thing in phone technology. Like a lot of bleeding edge technologies, they caused a lot of problems for early adopters.
The problem was not the idea, but rather the infrastructure. The thing that makes hosted phones so powerful is that they run over the public internet. There is just one problem: they run over the public internet.
It hasn’t been until recently that the data infrastructure of the average business has become robust enough to successfully implement hosted technology at a cost-effective price point.
In the past, the call quality and stability of running voice-traffic over the internet was simply too unpredictable to be a viable option for a business without significant investment in network infrastructure.
During this rollout of “hosted” technology, there was a focus put on the fact that these systems were “VOIP.” As we understand from earlier, there were benefits to “VOIP” technology, but these benefits were not only reserved for “hosted” phone systems.
However, the terms “VOIP” and “hosted” were conflated because they were presented by providers at the same time and often hosted providers were calling their phone solution a “VOIP” phone system. In addition, because “IP” stands for internet protocol, it is easy to see how that became synonymous with sending dial tone over the internet, which is what “hosted” signifies.
Summary
So, back to the beginning. Even now, there are many hosted phone system providers who are calling their technology “VOIP.” This is even further confusing businesses and consumers who are trying to understand what is being discussed and how it impacts them.
When I sit down with a potential client, I often hear, “I will never move to VOIP.” Oftentimes, these people are already on a VOIP system, but they don’t know that.
What they really mean is, “I will never move to hosted.” This is a valid point of view, especially because there is a good chance that person lived through a horribly failed hosted deployment back in the early-to-mid 2000’s. It was probably explained to them as a VOIP deployment.
Either way, they now have a misunderstanding of what VOIP is and also they are not aware of the advancement of internet infrastructure that has allowed hosted phone systems to provide a reliable means of carrying voice-traffic.
This may seem like a lot of trouble to make a small distinction. I think it is very important to make small distinctions because, usually, small distinctions are the difference between businesses implementing the best solution or implementing a solution they think they want.
