Is “over-subscription” still relevant?

(This post was inspired by these posts:  Does Integrity Still Matter? and Why This CEO Will Never Hire Another Salesperson)

I spent part of the end of 2014 evaluating Hosted VoIP Providers.  My peers motivated me to do this by saying that CBSi can more make money on Hosted VoIP vs. a premises-based system.  While I have no doubt that this is true, I always try to remember that one should treat others as one would like others to treat oneself.

Going back to our rich 26 year history, I started to ask myself some questions:  Why do we have a phone system?  Why do we sell and service phone systems for other businesses?  The answer was simple:  “over-subscription.”  Historically, phone systems have been an “over-subscribed” model, meaning that the number of phone extensions generally far exceeded the number of phone lines utilized.  This is simple cost-efficiency.  If you have 10 employees, it is unlikely that all 10 will be on the phone at the same time.  So, if you invest in a premises-based phone system, all 10 employees can share fewer phone lines.

In the old days, this involved complex Erlang math to figure out how many phone lines you needed.  With the advent of SIP Trunking, businesses can get unlimited lines (a.k.a. “call paths”) without paying more.  This gives a business the flexibility to scale on demand.

Let’s take my church as an example customer.  They have 10 users.  When they were looking to replace their OLD phone system, I had them invest in a premise-based system.  Their total telecommunications spend (system plus SIP Trunking) is indicated by the blue line in the graph below.  The orange line represents what they would have spent on a 10-user “full-featured Unified Communications (UC) solution.”  The grey line indicates what they would have spent on a more basic 10-user Hosted VoIP solution.  (I even threw in a hypothetical yellow line for a $10/user Hosted VoIP solution.)  A premise-based system always comes out cheaper for them.  10 users are served by a single $40/month SIP Trunking account.  Even a hypothetical $10/user/month Hosted VoIP solution would cost them more.


This graph had me wondering if my example customer, my church, was an anomaly.  So, I ran the numbers again for 100 users below.  Again, even a hypothetical $10/user/month Hosted VoIP solution would cost them more.


I conclude that carriers and sales people can make more money selling a Hosted VoIP solution.  I also conclude that CBSi’s rich 26 year history has treated us well.  And, we would like to continue treating our customers well in the hopes of another 26 years!

Here is to a successful 2015!

If you are interested in learning more about how we are providing people with thousands in monthly cost savings by moving them to SIP over the Internet, please call (804) 798-4444 Option 2 or email

Leave a Reply

Your email address will not be published. Required fields are marked *