4 Different Approaches to Choosing a Cloud PBX Platform: Find Yours

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May 16, 2024 · 6 min to read

There are several approaches to choosing a cloud PBX platform. For example, you can buy licenses from a vendor, build your own service using an open-source toolkit, start a co-branding partnership, or find a vendor with a RevShare model. Let’s discuss and compare all these options to help you find the most appropriate for your needs.

Buying Licenses

Some telecom operators buy licenses because they’re confident in the selected vendor and know the cloud PBX market well. For example, Cisco offers BroadWorks, a calling and collaboration platform that allows telecom operators to start a cloud PBX business on a CapEx basis.

Pros

Long-term savings. While the initial outlay is higher, owning the cloud PBX licenses will lead to lower costs over time because you won’t need to pay for recurring billing. Nevertheless, this advantage will only make sense if you have used the platform for years.
Predictable costs. After the initial investment, the costs associated with platform maintenance are relatively predictable. In the case of other models, subscription fees may rise, but you don’t know how exactly.

Cons

High initial investment. The upfront cost to purchase and implement infrastructure, hardware, and software is significant. Small OTT companies and telecom operators can’t afford expensive solutions, especially when launching a new service and testing a hypothesis; you can just lose money.
Technological obsolescence. After purchasing cloud PBX licenses, operators can encounter situations where their vendor stops investigating end-user demands and updating the platform. This problem can happen because such vendors aren’t usually interested in retaining existing customers, as all payments are made at the start.
Less flexibility. If a cloud PBX provider needs to adjust their system, they will likely contact the vendor’s support specialists. However, vendors with licenses usually don’t answer their clients quickly because of the reason mentioned above: lack of motivation. As a rule, such vendors get all the money at the beginning of the partnership and aren’t interested in building an excellent customer service system.

Buying licenses isn’t the best option for novice cloud PBX providers. You can pay too much and get an outdated solution that won’t attract new clients. Instead, better focus on other, less risky options.

Using an Open-Source Toolkit

You can build your cloud PBX service from scratch with open-source toolkits. This option requires deep expertise because only knowledgeable and experienced developers can create a robust service without a vendor’s support. For instance, companies usually use Asterisk, FreeSwitch, or KAZOO; some of them are free and can be customized differently.

Pros

Minimum costs. The most obvious advantage is cost savings because you don’t need to pay much for a vendor’s support. Nevertheless, you’ll have to invest in your specialists in any case.
Transparency. Access to the source code allows developers to inspect, analyze, and audit the software for vulnerabilities. This advantage can help operators lead to more secure implementations than closed-source alternatives.
Flexibility. Such platforms are highly customizable, so cloud PBX providers can modify the code to add basic features such as call forwarding, call recording, ring groups, etc.

Cons

Hard to scale. As usual, open-source platforms are good only at the beginning because cloud PBX providers don’t have a large customer base. Nevertheless, the more subscribers they get, the harder it is to maintain the platform — and sometimes, the only option is to find a new carrier-grade solution.
Inflexible for end users. Services based on open-source platforms aren’t intuitive for end users. They have to submit requests to engineers to configure call routing, complex scenarios for the IVR, and other features. This leads to an increased workload on an operator’s engineers.
Advanced features are unavailable. Open-source tools don’t generally support advanced CRM system integrations, call tracking, and other crucial functionality that are in demand today.

A cloud PBX service based on an open-source platform doesn’t suit small telecom operators. In the beginning, you don’t have deep expertise in this field. Moreover, you can’t build a service with in-demand features with the open-source toolkit because your competitors will use advanced solutions from specialized vendors.

Become a partner

With Digital Tide, your subscribers will get advanced cloud PBX features such as call tracking, CRM integrations, call whispering, and more.

Starting a Co-Branding Partnership

This option is excellent for telecom operators with an extensive subscriber base. Such companies collaborate with an experienced cloud PBX vendor, and each side gains advantages: the operators can provide new value to existing clients and increase the average transaction value, while the vendor can boost revenue by promoting its service to a broader subscriber base.

For example, BT Group and RingCentral are helpful to each other. British Telecom has a large subscriber base, and RingCentral offers a robust cloud PBX service. Together, they can reach many new customers and retain existing ones.

Pros

Shared experience. If you choose an experienced vendor, you can use their background experience to promote the quality of your service. For example, Vendor X has provided services to the telecom market for over ten years, and you’ve just recently started this business — so a lack of experience won’t be an obstacle to solid positioning and showing strong use cases.
Shared resources and costs. The two companies will share development, marketing, and operational costs, so launching the new service won’t be expensive for either party.

Cons

It will take more work to switch a vendor. Sometimes, operators decide to switch their vendor due to different circumstances. With a co-branding platform, it’s harder to do so because your service’s positioning is associated with the partner, and all marketing strategy is tightly connected with them. To switch a vendor, you must find another platform that is not entirely different, get rid of your partner’s mentions, and rebuild your service — there are so many steps to take.
Customer service challenges. Managing customer service and support for a co-branded cloud PBX service can be challenging, especially if there are inconsistencies in service levels or policies between the two brands.
Profit sharing. We’ve discussed above that both parties share all costs initially, but this is the other side of the coin. If this business succeeds, partners must share the profit, so every side earns less than it would without partnering.

Though a co-branding partnership is better than buying licenses and choosing open-source alternatives, it’s not enough to build a successful cloud PBX business. You will always depend on your partner’s decisions and won’t be able to switch the platform quickly.

Sharing Revenues With a Vendor

This approach allows operators to save money at the start. Every month or year, cloud PBX providers share, for example, 50% of their revenues with a vendor. As usual, the RevShare model goes with white labeling, offering the ability to launch the service entirely under an operator’s name.

For instance, Digital Tide offers this model for telecom operators and OTT providers. Clients start offering the service from scratch and only share revenues with the vendor. At the same time, the vendor takes on deployment, financial planning, marketing strategy, and other essential parts of a cloud PBX business, leaving an operator focusing solely on sales.

Pros

Professional support. Vendors with a RevShare model are interested in professional customer service because their clients can stop paying them anytime, and a vendor will lose regular financial streams. For this reason, such vendors usually assist cloud PBX providers with activities and are ready to discuss customizable assets.
Minimal investments. Sharing revenues is a great option because there’s no need to pay much. Telecom operators can test a hypothesis and determine whether the chosen vendor suits them. Besides, operators can launch the new service nearly for free and then share the first revenues later.
Regular updates. Vendors with the RevShare model regularly research what cloud PBX features are in demand today. This approach helps telecom operators ensure that the platform will always be helpful for end users and will not be full of obsolete features.

Cons

High long-term costs. If you constantly pay a vendor, you will probably spend too much in several years. However, this disadvantage is not so straightforward; without the vendor's help, telecom operators wouldn’t get a carrier-grade platform with regular updates.
Dependence on a vendor. With the vendor's help, telecom operators can delegate many activities to the vendor’s side. This approach can make the switching harder if something goes wrong. So, choosing a trusted vendor with successful case studies is essential.

Despite these two disadvantages, the RevShare model is the most appropriate for cloud PBX providers. Vendors of such solutions are interested in regular updates and supporting clients. Moreover, white labeling is a good option to strengthen an operator’s brand positioning.

Conclusion

Telecom operators' experience has shown that a RevShare model is the least risky option for small operators. It allows them to save money and get support, which is crucial when testing an MVP. Moreover, this model is trendy now, and large vendors primarily use it.

Nevertheless, finding any vendor with the RevShare model is not enough — without analyzing different solutions and case studies, choosing a carrier-grade platform won’t be possible. So remember all the pros and cons discussed above while searching for your most appropriate cloud PBX platform.

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Alexey Belyakov

CEO