In last week’s segment of “Hosted VoIP vs. Premise Based VoIP: The Honest Truth,” David Bryd, VP of Marketing and Sales at Broadvox and Eric Thomas, CEO of FreedomVOICE, address technical differences, common road blocks, and the issue of company size.

This week, the two VoIP industry leaders provide valuable answers to questions on security differences, bandwidth, equipment, and costs. One again, David Byrd will be representing premised based VoIP and Eric Thomas will be representing hosted VoIP.

Read this exciting interview addressing real issues with hosted vs. premise based business VoIP system below.

Moderator: Security is a major concern in any company. Are there security differences between a hosted and premise based system? What security differences should business owners consider when making purchasing decisions?

Thomas: I think the simple answer is that whenever you have more equipment in-house you have more security issues. That’s my perspective on it. So you need someone who is really going to pay attention to the details like changing passwords from default passwords, shutting down ports that aren’t going to be in use, etc., whereas in a hosted environment these things are taken care of for you.

Byrd: When mixing phone calls within a data network there is very little opportunity for eavesdropping once the calls reach us. The issue is really the connection between the customer and us. We get a lot of questions about what can we do to provide better security, but there are steps customers need to take with regard to their firewall, virus protection and internal security. So, it really puts the responsibility back on the customer to secure their system and it indicates that the company should have a given level of expertise to secure it properly.

Moderator: Does bandwidth become an issue when switching to VoIP? How does each of your products deal with bandwidth?

Byrd: To me the issue of bandwidth seems to be about the same for both technologies. If you have good bandwidth then the service will work well.

Thomas: Where I see the difference is with companies that support remote workers. Really the issue of how much bandwidth you need is about the same for either implementation. But what you do have to consider is the level of bandwidth being used at all the different company locations and you have to trouble shoot any issues that come up. It’s really in trouble shooting the issues that come with bandwidth and connectivity where the two technologies differ. Because with hosted, you have an expert team to help you with those issues and with premise based you have to deal with these issues internally.

Moderator: Obviously premise based and hosted systems require different equipment. What type of equipment is needed for each and how does the installation process work?

Byrd: When we’re talking about a premise based system, in addition to the phone infrastructure, routers and so forth which are common to either premise or hosted, you need a PBX and may or may not need an integrated access device or media gateway. Those would be the larger more capital extensive components. In nearly all cases, you’re not going to have those installed by the customer. You’re going to have a third party installing them.

Thomas: On the hosted side of things, in terms of how you set up your network, I feel like it would be fairly similar. The big difference comes when you have to put phones at locations. What’s nice about hosted is that all you need are the phones and an internet connection, everything else is outsourced to the hosted provider. So the install is significantly simpler, and so is the equipment required.

Moderator: What are the main costs associated with your product?

Thomas: So in the hosted situation you’re basically bundling the system and the service. The cost is a little bit of equipment, you have to pay for phones upfront unless you’re using a rental program or already have them on hand, and then the ongoing service which includes your unlimited domestic long distance and local calls.

When you’re talking about hosted, you have to be careful you don’t shop it on price only. There are a lot of people out there with low price offerings that are selling mostly on price, but their service is most likely not business phone quality, and you don’t want that representing your company.

There are really three types of business VoIP service as far as pricing is concerned. You have the lowest cost product being a hosted service with poor quality sound. Next you have a medium priced hosted service which sounds just like the public telephone network or better, and then the highest class being the IP-PBX which will sound similar to the public switched telephone network.

Byrd: I’m not sure about pricing on the hardware side because it is not what we do. We don’t sell the equipment, we offer the service and various calling plans.

The pricing of our service depends on what a business needs. Regarding our costs for supporting businesses with a normal level of calling, I think we have a very aggressive price for unlimited local and long distance service. We service call centers and customer support organizations too, which have a much greater demand in terms of capacity and usage. We offer them a different kind of product. The product pricing is between retail and wholesale. It’s a product meant for heavy use and high capacity. Our service offerings have the ability to adapt and work well for a variety of business models. The value we bring is the service we put behind the product.

Check back next week for the final segment of this 3part series when Byrd and Thomas reveal ways to distinguish between SIP trunking providers, tell us how to shop an IP-PBX, explain the main benefits of the two technologies, and recommend the perfect system for each business demographic.