10 Things to Ask before Signing a Hosted IP-PBX Contract

May 4th, 2015

Telephony systems and services hosted by a carrier are becoming prevalent in today’s business landscape.  Moving what was an in-house, capital expense to an outsourced monthly operational expense is a compelling argument for many businesses.

Before you sign on the dotted line, make sure that you understand all the fine print.  Here are some questions that will make the biggest impact on your transition decision:

1.       What additional fees are there aside from basic startup costs?

Find out if extra servers, interface cards, phones, and other add-ons are included in the contract price.   If your network doesn’t easily interface with the provider’s system, would you end up needing to purchase new cards and extra software just to get it functional?

It’s easy to be lured in by the small dollar figures when installation and equipment can be included for less than $150 per seat, but keep in mind that this is typically for the most basic setup.  You may realize that in order to maintain the features and user experience you’re used to, you’d need to add other equipment. 

2.       Are there additional usage costs that aren’t covered by my plan?

Hidden fees can be found almost everywhere.  Some providers charge extra for important features such as conference calling, toll free or international calls.  Be sure to find out what items are included and which are extra, and compare them to your typical usage so that you can forecast your pricing accurately. 

3.       What about my existing equipment – do I need to replace it?

Here is an area where you just may be able to save some additional money.  If you already have more recent analog phones, there is a good chance that the system provider can transparently work with your existing hardware.  This can be especially important if you are making this transition in phases.  Confirm what features will still be available and how they are handled.  For instance, if transferring a call goes from the press of a button to a major undertaking, it may not be worth it.  

4.       Do I need special equipment to fax?

This one is particularly tricky.  Certain systems can’t handle faxes at all; others require special add-ons to facilitate it.  Some are advanced enough to route the faxes around the adapter and deliver them to email inboxes instead of a fax machine.  Find out what will be needed and the associated costs so there are no surprises.  

5.       What will I need to do to upgrade when my company grows or changes? Or if I just underestimated our needs?

Unfortunately, miscalculating your needs when signing a long term contract is going to be a problem.  The only way to mitigate this situation is to make sure that you are working with a provider that is willing to make sure you are receiving good service in any situation.  If nothing else, they should anticipate that your company will be successful and grow so that you’ll re-sign when the contract is up, and will have a plan for keeping you as a customer. 

6.       How are remote workers handled?

Even if you don’t currently have a mobile workforce, it’s a good idea to find out in case it becomes a necessity later. Some providers are able to handle the remote phones just as if they were in the home office, but others are not.  Looking for a vendor that can support a mobile workforce is not necessarily the cheapest option, as often times it is more cost effective to go with the more basic system solution and simply utilize the call-forwarding feature to their remote line. 

7.       Do they provide full 911 or E911 services?

Since 911 compliance has been made a federal mandate, this is a problem that should be resolved very rapidly.  Even if the provider does not currently meet requirements, they ought to have a solution implementation in the pipeline.   

8.       What service quality guarantees are there?

This will probably be the biggest differentiator among providers.  Find out how you’ll get support if you do have issues with quality of service, who your point of contact is, and how long you should expect to wait before it is resolved.   Your communications system is the lifeline of your business, so don’t put yourself in a position to be at the mercy of a sub-standard provider. 

9.       What is the contract termination policy?

A common practice in the Telecom industry is to lock customers into a long-term contract with high cancellation fees.  Be sure to find out what penalties to expect should you decide to terminate before the contract is up – for both the equipment and the basic service – and the policies for doing so in case it ever becomes necessary.  

10.     What happens if you’re not even around when my contract is up?

This is an industry rife with competition and consolidation – there’s no mercy for the weak, and no guarantee of stability.  Your contract should specify whether it is binding if your provider gets acquired by another entity, including whether it will be honored by the new owner and if you can leave with no penalty should you find the conditions unfavorable.