Investor Information

By Stefania Viscusi
TMCnet Assistant Editor

For today's businesses, the benefits hosted services provide over those on-premise have allowed steady growth and adoption to occur.

Because IP technology offers significant cost savings as well as enhanced features and functionalities, it has grown to become the desired choice over traditional communications. For business where communications are becoming more and more a part of everyday functions, upgrading or replacing IP PBX's (News - Alert) with a hosted solution is slated to occur in the upcoming years.

According to a new report by Frost & Sullivan, the North American Hosted IP Telephony and VoIP Access Services Market will grow to about $14.6 billion by 2012, up significantly from the 2005 market, which earned $372.6 million in revenues.

This growth can be attributed to the rising use of unified communications and advanced conferencing, which allow businesses to offer communications that are more efficient and that increase productivity and collaboration. Significant cost savings offered by bypassing the toll fees associated with traditional calling is also a key driver. Because of these benefits, hosted IP has grown as a valuable asset for businesses of all sizes—and word spreads fast.

As a news release notes, "Companies that adopt hosted IP telephony

typically save 20 to 40 percent on what they would have paid for a

premise-based private branch exchange (PBX). When companies

have positive experiences with hosted telephony and access services

they spur adoption through word of mouth."

While large and medium-sized enterprises will benefit from making the switch to a hosted solution, SMB's will especially find benefits as hosted services allow for advanced features and functionalities at a cost that is reasonable.

As these adoption rates continue to climb and more businesses look to tap into the saving offered by hosted IP, the research firm urges that service providers take the time now, to demonstrate for customers the benefits and productivity gains of making the switch to a hosted solution.

A key to fostering this adoption growth is to distinguish hosted IP from free public Internet calling or voice over broadband which have service, security and sometimes quality issues related to them. Freeing customers from these concerns will spur further growth for the enterprise market, the research firm notes.

Providing innovative features unlike anything circuit-switched offerings include, while also maintaining reasonable pricing and offering ROI, are challenges service providers will face.

In light of this, the firm notes, "It is essential that service providers understand enterprises' needs and expectations, and provide a reliable soft switch, security, an excellent track record, and scalability for the network and collaboration capabilities, unified communication, four-digit dialing and presence management to enhance applications."

Earlier this year, research from Frost & Sullivan also found that the revenues in the EMEA Hosted IP telephony and VoIP Access Services Market totaled EUR 589.7 (720.526 US) million in 2005 and estimates revenues in that market will reach EUR 78.66 (96.1076 US) billion in 2011.