Friday, October 04, 2013

VoIP Phone Service, the new normative

Cloud based VoIP services are becoming the new normative for leasing office and other business phone services at multifamily properties.

Over the past few years, phone companies have been slow to realize and accept that telephone service is no longer a mainstream product.  As a result, obtaining and moving phone service from construction trailers and temporary leasing facilities to permanent leasing offices is more of a challenge for property owners than it needs to be.  Telephone and cable companies now view Internet service as their primary product, followed by video with traditional voice phone service a very distant third.  Alternatives for replacing traditional phone services are emerging though, as properties rely on the Internet more and more for operations.  The size of the Internet pipe feeding properties for residential and office use is both increasing and becoming less costly.  Property residents who now rely on their cell phones for voice communication rarely request traditional phone service.  When they do, most select services from the cable company, some VoIP (Voice over Internet Protocol) service from a third party (Vonage or MagicJack), Google voice, Skype or another web based VoIP service.
Many multifamily owners ask: “How do we meet the requirement for POTS (copper) telephone lines for our fire system”? The NFPA (National Fire Protection Association), which sets the standards for the fire system communicator, has changed NFPA 72 to allow for both Internet and cellular connectivity.  Security systems have had UL approval for years to use the Internet or cellular radio to communicate and monitor systems.  Elevators and other 911 devices, like Blue Light poles, now have both VoIP and Cellular Radio connectivity. 

Today, multifamily property operators have many choices, each with their own pros and cons.  InfiniSys has been transitioning its Customers to VoIP technologies over the last several years.  Now, many of the voice services delivered by traditional telephone companies use VoIP technology.  Cable companies have been offering their own versions of VoIP for several years as well.  In the rebuilding of lower Manhattan after the devastation from Hurricane Sandy, Verizon did not restore copper cabling, electing to use its FiOS technology instead, and now offers its private branded version of VoIP. 

So what are the economics of VoIP versus traditional business class telephone service and why do they make the most sense on a project that has bulk Internet service? 

  • ·         With conventional phone service, three to four components comprise the operating cost and a select few comprise the capital cost.  Operating costs typically range $50 per line per month including taxes, and telephone answering services may add another $50 to $100 per month for the property.  Voice and video conferencing may also increase the operating costs.  The capital costs are typically a small switch and the cost of the phones.  For example, 10 instruments and a switch installation costs under $5,000. 

  • ·         An on-property based VoIP switch, which offers all of the same features, may lower operating costs 10-20 percent, but may also have higher upfront costs and typically requires a special circuit.

  • ·         A cloud-based VoIP service uses a small piece of the broadband service to the property and is not tied to the physical location, removing the issue of transferring a phone number from a temporary location to a permanent location.  At a basic level, all of the same services as a traditional system are available at about a 50 percent savings per line per month.  While the individual phones are more costly, when balancing against the added cost of a phone switch, the end cost is usually a wash.  Feature sets such as conferencing, digital white boards, direct inward dialing, forward to cell with one button push, outlook integration, voicemail with forward to email and virtual switchboard may raise the cost as high as $35 per line per month, which still yields significant savings.  Even when separate bandwidth is required for operational reasons the separate bandwidth is usually in the range of $5 to $10 per month per device. 

Owners should explore and migrate to VoIP to both increase functionality and reduce operating costs at their properties, providing long-term cost savings.

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