Although voice-over-internet-protocol (VoIP) services offer many more features than most business landline systems, they may not be right for every business. Some of the reasons companies opt for a public switched telephone network (PSTN) over on-site or cloud-based VoIP services include connectivity, call volumes, costs, and regulations. Find out why using VoIP dedicated server hosting may not be right for your business, and which alternatives to choose instead.
1. Your Location Has Limited Internet
Unlike a PSTN, cloud PBX requires a reliable internet connection and plenty of bandwidth. Remote or rural facilities may not have the necessary speed to support VoIP services. Lack of bandwidth can cause latency and jitter, meaning data packets are delayed or received in the incorrect order.
Without stable internet services, you may experience dropped calls or broken up audio or video. In some cases, your main office may have a decent connection, but your warehouse or factory doesn’t. In these instances, you could opt to use a VoIP server or go through a provider for your office phones and use a landline in your warehouse.
2. You Make Infrequent In-office Calling
Cloud-based services often offer unlimited calling, auto-attendants, and features that support high call volumes. But if your business doesn’t make or receive many phone calls, a VoIP system like this may be overkill. Plus, the per-user cost can be expensive if you only make the occasional call. You may save money by using a mobile device or landline service with basic features, like voicemail.
On the other hand, if you want a business phone number and a virtual receptionist without a monthly plan, providers like Phone.com offer pay-as-you-go options and Grasshopper packages give multiple extensions for employees, so you don’t need to pay a per-user fee.
For more low-cost business calling options, check out our list of the best free business phone number apps.
3. You Don’t Have Dedicated IP Phones
Although VoIP works through softphone apps on desktops and laptops, you or your employees may not feel comfortable using a softphone since they aren’t very mobile or tactile. Likewise, if your office has existing hardware like desk phones and fax machines, you may want to use your equipment instead of investing in adapters or IP phones.
Replacing your traditional phones with IP phones or headsets can be pricey. If you’re not ready to buy adapters or new hardware, it may be better to stick with your current phone services.
4. You Frequently Need Emergency Services
Some industries require a constant connection to emergency services—they can’t risk a power outage or internet failure leaving their business vulnerable. Although many VoIP providers offer E911 service, you can’t ensure a constant connection unless you purchase a battery-operated backup service that uses cellular data or unless you have a landline.
However, you get 911 services with some VoIP systems. For example, RingCentral comes with enhanced nomadic 911. It lets admins set up predefined locations, and the system sends that information to emergency responders. The 911 function works when using select hardphones or the RingCentral desktop app.
5. Your Business Is Prone to Viruses, Worms & Other Cyberattacks
If your business is constantly fending off cyberattacks, you might be concerned about potential vulnerabilities of VoIP phone systems. It puts your user datagram protocol (UDP) and transmission control protocol (TCP) at risk, allowing them to be used in a distributed denial of service (DDoS) attack.
Insecure internet connections and Wi-Fi networks can leave your phone services vulnerable to attacks. Additionally, malware can infect your network and devices. Hackers can break into your VoIP system and eavesdrop on calls.
However, you can mitigate these risks. For example, implementing strong security tools and protocols and encrypting voice conversations and data reduce the risks of using a VoIP phone service. Services like RingCentral also provide session border controllers, intrusion-detection systems, and multiple authentication levels.
6. Your Company Faces Strict Compliance Regulations
Highly regulated industries, such as companies in the financial or healthcare sectors, must work with their legal team to confirm that any type of digital communications is secure. For some businesses, making the shift to a cloud-based phone system seems too risky.
For example, Grasshopper isn’t a HIPAA-compliant service. HIPAA is the Health Insurance Portability and Accountability Act that protects patient data, which is also sometimes referred to as electronic protected health information (ePHI). HIPAA ensures encryption and proper storage of this data.
On the other hand, Phone.com services are HIPAA-compliant, and you can request a business associate agreement (BAA) through VoIP providers like RingCentral to comply with HIPAA rules. A BAA serves as a legal contract between the provider and your HIPAA-covered business that confirms all transmitted data is protected.
5 Advantages That Might Make VoIP Hosting Worth Trying
If there’s no obstacle to using VoIP, implementing one of the best small business VoIP phone systems can save your company money and improve your team’s productivity. However, the costs and benefits may vary depending on your setup and hosting.
The advantages of VoIP services include:
- Minimal hardware investment: If you already have internet services, you can use hosted VoIP without buying new equipment. It works with mobile phones, desktops, and laptops. If you want a dedicated VoIP server, you’ll need to use an existing computer or a dedicated server room, depending on the size of your system.
- Advanced features: Some systems come with advanced VoIP features and united communications (aka UC or UCaaS) capabilities. These help you improve customer experiences by routing callers via an auto-attendant, offering a dial-by-name directory, and on-hold music. Adding UC features expands your team’s collaboration and communication capabilities with video calling and conferencing, chat, file sharing, and more.
- Scalability: Unlike conventional phone systems, cloud-based services let you add or drop a line without calling for a technician or adding wiring. In addition to a monthly subscription plan, there are pay-as-you-go solutions that may fit your needs.
- Maintenance options: The VoIP provider handles updates and maintenance with a cloud PBX system, making hosted VoIP PBX a low-maintenance solution. In contrast, if you’re hosting VoIP yourself, your team has full control over the system and oversees all maintenance.
- Better productivity: The best business phone systems offer various routing methods and features like hotdesking and call flip. These get callers to the agent best equipped to handle the situation and let employees answer calls on their preferred device and location.
RingCentral earned our top spot as best VoIP system for small businesses. Read our full RingCentral review to find out more about the advantages of VoIP calling systems and what sets this provider apart.
VoIP Dedicated Server Hosting vs Cloud Hosting
If you do decide to bring the advantages of VoIP systems to your business, you’ll also need to decide whether to use VoIP dedicated server hosting or a provider’s cloud-based solution. Maintaining an on-site dedicated VoIP hosting server requires many more resources than VoIP provider-hosted (cloud-based) services.
Dedicated Server VoIP Hosting
With VoIP dedicated server hosting, you handle the installation of a private branch exchange (PBX) system and VoIP server maintenance will be in-house. In contrast, with hosted VoIP PBX, your VoIP provider oversees the servers used for your phone service offsite.
Consequently, larger organizations with an information technology (IT) team are a better fit for VoIP dedicated server hosting. Enterprises often choose VoIP self-hosting because their teams can create a fully customized system and retain complete control over their service quality and data.
An in-house IT department is needed to set up a self-hosted private branch exchange (PBX) system, troubleshoot issues, and maintain and upgrade equipment. Therefore, a tech-savvy team and ample financial resources are the minimum requirements for an on-premise PBX solution or a hybrid option that combines on- and offsite services.
Cloud-based VoIP Hosting
Smaller businesses may not have the IT staff and financial resources needed to maintain or upgrade the VoIP server and associated infrastructure over time. In this case, a provider-hosted, or cloud-based VoIP service would be the better choice.
Alternatives to VoIP Hosting
There are several alternatives to VoIP services, including virtual phone providers, PSTNs, and hybrid systems. In each case, it’s important to understand your company’s needs and decide how to proceed. Consider the following VoIP alternatives:
Virtual Phone Services
Like VoIP, a virtual phone number provider transfers audio data over the internet. It forwards calls through your current cell phone, allowing you to make and receive calls using your mobile data when internet service isn’t available.
One advantage of virtual phone services is low cost, since you will generally be able to use your existing equipment, such as your company’s mobile and desktop phones. Plus, virtual phone systems like Grasshopper help you control costs since plans only scale by capacity, and all features are available to your business from the get go.
Find out more about how VoIP vs. Virtual Phone Systems compare and which might be the best option for your business.
Landline Phone Systems
A traditional landline works better for companies lacking reliable internet service. Instead of a VoIP server, you can use an on-premise PBX system. However, landlines are less flexible and scalable, and aren’t optimal for distributed teams or businesses whose sales reps are often doing business out of the office.
You can combine systems to get the perfect solution. This involves an on-site PBX for your main office using cloud services for branches or a basic PBX system for communications keeping your collaboration process in the cloud using third-party services.
Frequently Asked Questions (FAQs)
What’s the difference between VoIP & a virtual phone provider?
With a hosted VoIP service, you get features that typically surpass mere business calling. For example, a VoIP provider like Nextiva has features like video conferencing and international calling. On the other hand, virtual phone providers like Grasshopper are more attuned to smaller teams that don’t need these extra features. Virtual phone providers focus more on basic calling features like call forwarding and virtual fax.
What internet speeds are needed for VoIP?
The speed required for VoIP is dependent on the number of concurrent calls you’ll be making. For example, for a single call at a time, at the bare minimum you should have a 100 kilobyte per second (Kbps) connection. This isn’t a very fast connection, and it would be terrible for more than a single call.
As a general rule, you want to err on the side of faster speed. For example, for 10 concurrent calls and for high-quality single calls on the best VoIP services for small businesses, you should have a connection that can support anywhere between 5 and 10 megabytes per second (MBps) at a minimum.
What is a service level agreement?
This is a promise made by VoIP providers for service uptime. For example, with a 99.99% service level agreement (SLA), the provider guarantees that service will be up 99.99% of the time. This amounts to no more than 52 minutes of service downtime per year.
Cloud-based VoIP phone services deliver an array of features, giving your team flexible options for communication and collaboration. But on-site VoIP hosting requires ongoing maintenance, and all voice solutions need a stable high-speed internet connection. In some instances, a VoIP alternative may be a better fit for your organization.