Cloud telephony: An unrealistically overpriced service in India

TLDR: Don’t use Cloud telephony.

Our team at LeanAgri has a high dependence on having calling solutions for our customers who are usually not comfortable with new technology such as apps. We require 2 major solutions:

• IVR calls to easily scale and automate our services which are majorly repetitive in nature.
• At the same time, build a call center system that our team uses to recieve and manage calls from customers.

If you have used one of the cloud telephony providers in India, you would have seen how easy it to set them up and use them. Here’s an analysis of why it makes no business sense to ever build your business on top of telephony providers, unless your call volumes are extremely low. It goes against the Bezos’ principle of operating your business frugally.

What is Cloud telephony and how to use it

Indian Telecom regulations don’t allow VoIP, so it isn’t easy to set up cloud telephony in India. So in India, Cloud telephony is simply telephony as a service and not VoIP.
In simple terms, it allows you to digitally make and receive calls on your phones without investing in any hardware such as a GSM gateway or a SIP line. The calling still happens on your normal phone networks. Here’s a detailed report from one of the leading providers for you to read more.

Is it hard to build and maintain a cloud telephony business?
Not at all, all telephony providers work on top of very sophisticated Open source solutions such as Freeswitch, Asterisk etc. which are a little outdated to work with (bad User interfaces and hard to understand terminology), but good scalable solutions. This is one of the major reasons why the market for both cloud as well as on-premise telephony is extremely crowded with lots of players.

Should you use Cloud telephony or on-Premise PBX

Let’s do some math to find out when does Cloud telephony stop making sense. I would not name a provider but take an example of some provider called X which charges you Re 1/min for incoming and outgoing calls. You can find providers charging you a little lower, but at some higher volumes you will again hit the same spot. (Note: The cost is considering 2 calls for both Agent end and Customer end.)
We will assume no rental for this provider, while this in fact is false. All providers charge quite hefty amounts of rental.

One major advantage of Cloud telephony providers is that they usually eliminate the concurrency of calls as a limitation and allow unlimited channels. This could be one of the major reasons to stick with them if you don’t want to think of the implementation details. In my experience, I see it as a physical limitation and that’s something which shouldn’t be solved if they are going to be outrageously priced.

On the other hand, buying an on-premise solution needs you to have: a) A server on premise and b) A software solution for running the server. These solutions are delivered by lots of vendors in India for roughly Rs 1L. They provide everything that Cloud telephony providers offer: IVR calls, Call recording, API support etc. You can also achieve the same yourself by learning a bit of Asterisk, or hiring an Asterisk freelancer.

Using a GSM gateway

A GSM gateway is a device which takes in SIM cards and connects them to a computer. The hardware requirement costs around Rs 50,000 for a gateway device which takes in 8 SIM cards.
It becomes a very smart investment for the Indian scenario since costs of mobile providers have come down drastically ever since Jio came in.

Cost of running 4 SIM: Rs 2000 / month
Possible number of calls: Unlimited

Assuming the above cost, you are beating Cloud telephony by a huge margin. With cloud telephony you can do just 2000 minutes monthly = 60 minutes daily.
Disadvantages of using GSM gateway:

• There is no possibility of using a single outgoing number when using a GSM gateway. Calls are dialled from as many numbers as you use in your GSM gateway.
• And of course, using GSM is less reliable than using copper lines, although the difference between this reliability has become very thin in the past few years with better infrastructure.

Using a SIP line

Using a SIP line makes sense when you target higher volumes, since you would be purchasing a minimum of 20 lines.

Cost of running 20 channels: 15000 Rs / month
Possible number of calls: Unlimited

Again, in the above cost if spent on Cloud telephony, you can just do 15000 minutes monthly = 500 minutes daily which seems like a big number but it is very small if you have 10 agents.

Does this mean Cloud telephony has great opportunities?

Although cloud telephony inherently doubles costs due to always creating 2 calls and then connecting them, I still believe there is a lot of opportunity in the market.

• Telecom operators can innovate and provide APIs with telephony services, this would remove the double call problem.
• Cloud telephony providers can create better models since with the underlying hardware being shared, they can best utilize the cheap rates with SIP lines possible today.

I would love to understand more in depth about it from someone who belongs to the industry, but on a higher level, it makes no sense to me. The same conclusions have been derived by others too. Hopefully the businesses relying on Cloud telephony providers wake up and realize it is a stupid idea:

Bottom line: Don’t use cloud telephony. It is the era of unlimited calling with both SIM cards and GSM lines but your telephony providers still charge you by the minute, It may be time to move out and create your own infrastructure.