There is no one good answer for the debate between on premise vs. managed and each of these options have sub-options to consider and decide on. The devil is in the details and in many cases a hybrid solution is required, using some functions (such as NAT traversal) from 3rd party hosted services while licensing (open source or commercial) other components of the solution.
There are 2 main decision criteria for choosing a video codec – technical and business. Tsahi touched the technical part in his post. While I’ll get a bit into the technical aspects as well, in this post I also want to cover some of the business considerations. Let’s put one thing behind us. The difference between H.264 and VP8 from quality perspective is more of a religion than anything else.