Traditional Telephony Vs Hosted Telephony

The buzz that surrounds hosted telephony (or cloud telephony) at the moment is creating the feeling that traditional telephony is becoming out dated and no longer a viable option. In fact this is not the case at all. Manufacturers are still producing traditional telephone systems and the associated hardware, and are constantly up-dating the software that accompanies them in order to keep up with the competitive market. Both TDM and Hosted Telephony have their advantages, but your choice of telephone system very much depends on the needs of your organisation. Choose carefully and do not be misled in to thinking that hosted telephony is the only way to go.

Traditional Telephony or TDM utilises either analogue or digital lines through a telephone system on site. In contrast Hosted Telephony provides telecoms applications, switching and storage via a third party outside of the organisation. Data and voice communications are internet based, accessed over the public internet. In other words, telephones are plugged in to a router and no other equipment is needed.

So what do you need from your telephone system? For a small company, in an office that needs to get up and running quickly, Hosted Telephony can be a good option. A few IP telephones can be plugged in to an existing data connection (speed must be good) and the services can be provisioned within a few days. The Hosted Telephony set-up offers a feature rich solution with options such as auto attendant, call transfer, call routing and mobile working, to name a few. This can be set up for a fraction of the cost of installing a new phone system and new telephone lines. The customer pays a monthly licence fee depending on what service they require.

The caveat of Hosted Telephony is that the customer pays a licence fee per user. So for larger companies, say with 40 staff, the customer would pay 40 x licence fees per month. With TDM you may have a digital line circuit with the capacity for 12 concurrent calls, so you would only pay licence rental for 12 channels. This means that if the licence and rental charges were around £12.00 each the TDM option would be much, much cheaper per month. You have the upfront fees of a new system, but in the long term you are greatly saving money by using TDM products.

Hosted packages are generally now sold with free call bundles i.e. free calls to UK local / national and mobile Destinations, typically charged at around £6.00 per month. Add this to the hosted licence fee and your monthly charges may begin to add up. The only time a call bundle will benefit the customer is if they are an outbound call centre and make lots of calls, or if the company is small and want to have a fixed fee per month rather than the unexpected high call costs that they might experience.

Refer to our guide ‘How do you Choose a Telephone System for your Business?’ for more information.