Reliability, Continuity

Carrier-grade reliability is provided for hosted services, with element redundancy usually exceeding that of premises solutions (or, at least, customer willingness to purchase the same level of CPE redundancy). Operation centers are hardened and usually better protected against natural disasters than CPE sites. Hosted service customers also avoid the need to purchase UPS protection for the telephony servers.
Business continuity/disaster recovery capabilities are one of the most important benefits of hosted services. Hosted solutions are backed up with the most current configuration. CPE solutions can be backed up, but there is an extra cost in terms of either internal resources (and storage) or external resources (managed service).
If a CPE customer were to lose its system due to fire, flood, tornado, etc., they would have to pay to replace it (or pay for the insurance against such a loss). In a hosted service environment, it is less likely that these events would disrupt service, and even if there were a disaster, customers would not be liable for the replacement costs.
Single-site businesses with CPE have relatively few options for seamless disaster backup. In a hosted environment, enterprise users can take their IP terminals or soft clients home, connect through Windows XP phone system to any broadband access connections, log in and have the terminals operate as if they were at their place of work. This provides the ability to maintain business operations and receive calls during disasters that prevent people from getting to work. Some CPE systems, such as Mitel’s, can offer this capability but most, at this time, require employees to have softphone capability provided (at an additional cost) to achieve the same functionality.
E-911
The capability to have 911 calls traced to individual jacks/offices in a building is built into the hosted offer. CPE capabilities in this area vary, but to obtain comparable functionality, customers often have to buy additional servers and application software. Some vendors do not offer this level of capability at all, and their E-911 solutions only provide building address information to the Public Service Answering Point (PSAP).

Virtual Office

The same hosted terminal “broadband plug-in” functionality mentioned above facilitates regular virtual office work without the cost overhead of softphones for users who only work either at home or at a company site (i.e., not road warriors). It also allows companies to pay their corporate rate for calls made from workers’ homes instead of the employees’ residential or business rates, with the added overhead of expense reimbursements.

Purchasing Leverage

Hosted solutions may cause a loss of price leverage that comes from having multiple providers of CPE solutions. Customers usually can leverage equipment vendors and drive down prices of equipment and maintenance by using multiple suppliers. However, InfoTech research shows that customers are increasingly migrating to single manufacturer solutions, so this leverage may be evaporating anyway.
Admittedly, it is less likely that customers would be able to play multiple hosted providers against each other for two reasons. First, in secondary markets it is hard to get multiple providers (at least at this time). Second, utilizing two hosted service provider networks defeats the objective of a centralized architecture and applications environment.