Hosted VoIP Services or On-Premises Phone Systems?

If you’re trying to figure which telephony solution is right for your business, here’s a list of the main factors to consider when comparing Hosted Voice over IP (VoIP) services to on-premises phone systems:

Primary Considerations for Hosted VoIP Services

  • Limited capital outlay is required to initiate service. Since the service provider owns the equipment, you pay a monthly fee to access the provider’s infrastructure.
  • Service providers typically have more technical resources than their customers to maintain and upgrade their hardware and software.
  • New features and capabilities are regularly available to customers when they work with accomplished service providers.
  • Relocating the phone service is an easy task. You simply plug your IP phones into another Internet connection.
  • A good provider’s off-site data center will have the proper redundancy and safeguards built-in to ensure continuous operations during power outages.
  • If you partner with an ill-equipped service provider, you may experience voice quality issues. Poor voice quality can be an issue with inferior equipment, connections and networks. Proven service providers will have the best technology and personnel to ensure excellent voice quality.
  • Some providers may not allow customization of features.
  • Depending on the provider, cancellation fees may be due if a subscription contract is cancelled early.
  • The strong growth of VoIP has brought many new service providers into the market. Some of these providers may not have the financial stability of others.

Primary Considerations for On-Premises Phone Systems

  • Since you own the equipment, you have complete control over it and can configure it exactly to your requirements.
  • Although hosted VoIP service is less expensive in the shorter-term, owning an on-premises phone system can reduce expenses over the long haul.
  • Given you’re responsible for housing, installing, maintaining and upgrading the system, you can establish the security measures that provide you with the most peace-of-mind.
  • You need to make a significant capital investment at the time you purchase your system.
  • You must staff the appropriate resources in-house to manage the phone system properly. Some telephony experts can be hard-to-find and/or expensive to recruit.
  • Depending on the system you install, scaling up or down may not be easily accomplished. Adding more capacity may be expensive. Or, if you plan for the future by purchasing a larger system upfront, you may be paying for a significant amount of unused capacity.
  • If the manufacturer of your on-premises phone system experiences financial difficulty after your purchase, you may not be able to upgrade your system. You could eventually get stuck with obsolete technology.
  • You may need to invest in additional technology to safeguard your system from power outages.

Before you make a decision, you must thoroughly evaluate the fundamental differences of each solution. When you implement the right phone service, your business, employees and callers will benefit.

To learn more about hosted VoIP services, download FairPoint Communications’ latest white paper titled “The Complete Guide to Hosted VoIP.”

By providing more streamlined, intelligent and cost-efficient solutions, FairPoint Communications helps businesses of any size get the most from their voice applications. FairPoint offers two voice options: Hosted PBX and SIP Trunking. A cloud-based voice service, FairPoint’s Hosted PBX eliminates capital investments in telecommunications equipment. SIP Trunking leverages an organization’s existing on-premises equipment by connecting it to FairPoint’s advanced softswitch network. Both options simplify network requirements, provide access to enhanced features and lower operational costs.

For more information on FairPoint Hosted PBX or SIP Trunking solutions, visit

Chris is the former Vice President of Product Management at FairPoint Communications, a leading provider of advanced communications technology in northern New England and 14 other states across the U.S.