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Hosted PBX Aids Channel Business Transformation

By Charlene O'Hanlon
December 28, 2010 - Article

The convergence of telecom and traditional IT are blurring the lines that divide the two groups; consequently, an increasing number of channel partners are realizing a critical need to extend their businesses to meet the needs of both.

Both sides may find a certain salvation in hosted PBX — a managed service that enables telecom agents and VARs in both spaces to offer PBX services without having to invest much — if anything — in education and infrastructure.

With hosted PBX services, customers get the benefit of an IP communications system without having to invest in the hardware. The actual PBX, including the hardware, software and switching, lives offsite in a centralized data center. Customers can use either their existing phones, if they are IP-enabled, or purchase endpoints and pay a monthly expense for the use of the system.

For customers, the benefits of hosted PBX are many: There is no capital outlay, just a monthly operating expense; managed PBX offers many robust features that would require system upgrades for on-premises PBXs; and many times a managed service can be utilized for employees in disparate locations as well as in the central office, such as remote-office or home-office workers.

VARs, agent and consultants, too, can realize benefits from a hosted PBX service — namely it can be sold as a line card item, so the service provider doesn’t need a deep understanding or knowledge of the technology, and it offers a monthly recurring revenue unlike margin-based hardware sales.

The market, too, seems to realize the benefits of hosted PBX services. According to recent research by ABI Research Inc., hosted IP PBX services worldwide were expected to reach $3.4 billion in revenue by the end of 2010, a 15.3 percent increase over 2009.

Hosted PBX is not a new technology; its roots go back at least 10 years to early 2000. In its early days, hosted PBX was plagued with performance issues related to bandwidth and latency, giving the technology a bad reputation in the business community. However, advances in infrastructure and delivery technologies have helped give hosted PBX a second chance at life.

Chris Cook, general partner at Vale, Duval and Chambers, a telecom-focused consultancy based in Atlanta, noted that hosted PBX provides a good middle ground for both telecom and IT camps to converge. As more communications technologies become IP-based and run over existing IT networks, customers expect their service providers to offer up both networking and telecom services regardless of their expertise.

“You have dozens of little interconnects that have been selling traditional key systems or PBXs and now with the business rapidly shifting toward IP PBX, managed PBX services provide the opportunity to expand their business," Cook said. “Also, you’ve got the IT-centric people that traditionally have done the desktop and LANs, and they need that bridge to move into telecom in order to survive."

Because the technology provides a level of features that normally comes in enterprise PBXs but at a lower monthly fee, hosted PBX services often are targeted at the small business space. But Joel Maloff, director of channel programs at, a hosted PBX provider, said the services are robust enough to fit in to an enterprise setting as well.

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