The point of demarcation is important to service providers as it limits their exposure and risk, thus limiting their scope of responsibility and costs, but the growing popularity of cloud computing and hosted communications services promises to dramatically change the picture - perhaps most dramatically in the wiring closet.

Before hosted communications, most businesses' wiring closets were filled with a calliope of data and voice equipment including CSU/DSUs, routers, firewalls, network security appliances, legacy KSU/PBX and sometimes a relatively new IP-PBX.

With cloud computing and hosted services, most of the logic and communications software moves to the service provider data center, allowing much of the old equipment in the wiring closet to be removed and replaced with a new generation of customer premise equipment, the Multi-Service Business Gateway (MSBG).

Manufactured by data and VoIP equipment companies, a MSBG is a single device that terminates the physical connection from the service provider, converting the physical and data protocols to match the customer's communication needs. In many cases the MSBG also includes a router, firewall and security software, and provides some on-site logic for survivability in cases where the connection to the network is severely congested or lost.

The benefits of replacing all of the separate equipment with a hosted service offering and MSBG include a reduced footprint and less shelf space, reduced power consumption, a lower likelihood of cables getting accidentally disconnected, an easier ability to manage, and generally a more cost-effective method of delivering services.

With less equipment, less space and lower cost - what's not to love about this new arrangement?

For the service provider, hosted services and the MSBG dramatically extend their responsibility and change the point of demarcation. With a hosted communications system, does their responsibility end at the MSBG, the desktop or maybe even the IP phone?

Surely it will vary by service provider, but it does seem logical that the MSBG would be a natural choice for the point of demarcation. This would make customers responsible for their network switch, cabling and IP phones. But does this mean that the service provider is responsible for the data router, firewall and network security, which is often managed by the end-customer?

Maybe this is suitable for some small and mid-size businesses, but many IT professionals would have a problem if they could not manage the IP assignments, port forwarding and other security policies on their own network. Imagine having to call your service provider to adjust your firewall settings because you bought an IP security camera. This would be a losing proposition for both sides.

The solution is a "virtual point of demarcation" - a point within the MSBG that marks the end of the service provider's responsibility. One reasonable point would be between the data modem and the firewall. This would make the service provider responsible up to the point of the modem and the customer would be responsible for the firewall, router and all other functions from that point onwards.

For many businesses, hosted or "cloud-based communications" is a good fit as it offloads most of the responsibility and equipment to the service provider's domain. For others, giving up control and supervision of their communications system and security is too much to bear. Knowing where the point of demarcation is important for both the service provider and the end-customer, and the introduction of the MSBG offers some new opportunities and challenges for both parties.The introduction of hosted and cloud services along with the MSBG make a great combination that improves the speed of deployment, reduces costs and improves service. But before jumping into a hosted solution, take a careful look at the point of demarcation and make sure that it fits into your control and security plans.

The right combination of control will allow you to make choices about your on-site configuration, network equipment and endpoints, which will allow you to avoid getting stuck with the 21st century version of the Bell Black phone.

AudioCodes is a leading provider of VoIP telephony products and enabling technology.