One size definitely does not fit all when it comes to a phone system for your business. Making a choice between a Hosted PBX vs Cloud PBX vs On-Site PBX can be daunting! There are enough acronyms to make your head swim. Switching to an IP-PBX system is definitely beneficial and we can take the guesswork out of choosing the correct system. If you need some expert help in making your final choice, contact the telecommunications specialists at Network Telecom today.


“We recently had a new Avaya IP 500 system installed at our new facility. Since then it has worked flawlessly. It is easy to use and the PC interface is very user friendly. As a property manager, I am accustomed to bizarre excuses and missed due dates, but Network Telecom did exactly what they said they were going to do, when they said they were going to do it. Any questions that I had were answered promptly and professionally. It was a pleasure working with Network Telecom, and I would not hesitate to deal with them again.”
– Doug B. – More Testimonials

What is a PBX?

A PBX (Private Branch Exchange) is a method of allowing a business’s telephone system to have one external number or line for the outside world that all of the internal lines access. The PBX provides a way for all of the lines to be connected together. Calls can be transferred and made within the organization without each telephone requiring its own individual outside line. Instead, each user will have their own 3 or 4 digit extension.


Benefits of a PBX Telephone System

A PBX allows a variety of people to use one line. This way a business can have one phone number but all of its employees can be reached through that one number. A PBX also allows employees to call each other using their extensions.  Some other features of a PBX system include:

  • Automated call answering, giving the caller menu options they can use to reach the department or extension they require
  • Automated customizable greetings
  • Management features
  • Music can be played for callers on hold
  • Voice messages can be recorded for each extension
  • ACD (Automatic Call Distribution) feature which allows the option to evenly distribute calls amongst employees

What Is An IP PBX?

PBX telephone systems have been in use for many years and have been used throughout the time of landline systems. They were mainly used by larger companies because of the high cost of purchase and set-up of the equipment required to run them. With  the development of the Internet and VoIP (Voice over Internet Protocol), this has changed. It is now possible to have an IP PBX, which means having a PBX that uses the much more affordable VoIP services. This is because IP PBX (Internet Protocol Private Branch Exchange) is based around software (the software provides all of the PBX features) as opposed to having to purchase expensive PBX hardware.

Avaya Support Guelph

Hosted PBX vs Cloud PBX

The terms Hosted PBX and Cloud PBX are sometimes used interchangeably, however, there are slight differences. Both services aim to allow the user to:

  • outsource their infrastructure and maintenance
  • use a per-user, per-month pricing model
  • give you geographic independence
  • provide disaster recovery
  • provide scalability

Hosted PBX: With a hosted PBX service, the call platform and PBX features are both hosted at your service provider’s location and your business connects to these services using an IP (Internet Protocol) which connects the user to your provider for service.

Cloud PBX: A cloud PBX is based on cloud computing technology, so your calls are transferred over the Internet rather than through a computer or hardware device at your service provider’s location.


Hosted PBX vs On Premise PBX

Hosted PBX vs Cloud PBX vs On Site PBX

What is Hosted PBX?

A Hosted PBX, also known as a Hosted VoIP, is an internet phone system in which the provider houses the IP PBX at their location and looks after all of the technology necessary to run the phone system. The telephones at the business will be plugged into a router and this router will connect them to the provider. All calls, signalling, and features are handled through an IP_PBX server which is located at the provider’s location.

The provider usually charges a monthly fee that includes a phone minutes package and other agreed upon features. Sometimes calls are charged by the minute.

hosted pbx

What is On Premise PBX?

On Premise PBX is sometimes called IP-PBX and it is similar to a traditional PBX system that is physically located at your business’s actual premises in a computer room or perhaps a phone closet. The calls can either go through a traditional phone company using Gateway cards or over the Internet (VoIP) using SIP trunking. Often an Asterisk (the software that runs the PBX system) based system is used as it is the most economical option to operate On Premise PBX.

Hosted PBX vs Cloud PBX vs On-Site PBX – Our Recommendations

It may be difficult to decide which is the best option for your business: Hosted PBX, Cloud PBX or On-Site PBX. The following is a quick summary of the type of business that is suited to each of the 3 choices.

Hosted PBX vs Cloud PBX vs On Site PBX

Advantages and Disadvantages of a Hosted PBX

Advantages- The following is a list of advantages of a Hosted PBX:

  • Your provider will handle any new feature installations
  • It is very easy to choose and cancel virtual phone numbers
  • It is very easy to move your phone system as each IP phone is simply plugged into a broadband connection
  • Your provider will look after installing any patches or upgrades to the IP-PBX
  • In case of a catastrophic event or loss of Internet, your business calls will be sent to voice mail or to a mobile phone so that your business operations will not be adversely affected

Disadvantages- Here are the disadvantages of a Hosted PBX:

  • Voice quality and connection can sometimes be poor as they are affected by your Internet connection
  • If your Internet goes down, so does your phone system
  • Depending on your provider, you may find that getting your features customized may be slow
  • Monthly fees may increase and there may be cancellation fees.

office phone system

Advantages and Disadvantages of an On Premise PBX

Advantages – The following are a number of advantages in purchasing an On Premise PBX:

  • You have full control to create, adjust, and delete users as required
  • New open-source feature sets can be added without additional license fees
  • You can keep your current carrier
  • VoIP trunks can be added to save you more money
  • Owning your own server can save you money over time
  • In case of a catastrophic event or loss of Internet, your business calls can be sent to another number or to a mobile phone using SIP trunking so that your business operations will not be adversely affected. This is thanks to fail-over in an off-site facility that employs safeguards such as backup power sources.

Disadvantages – Here are the disadvantages of getting an On Premise PBX:

  • Requires someone who can manage the system properly
  • If your IP-PBX manufacturer goes out of business, you may have problems with managing root issues.
  • You may need to call in and pay for a technician to do upgrades and install patches on software.
  • If you lose power or your PBX server fails, your business operations may be interrupted.


Learn More About Network Telecom

Network Telecom has been in operation since 1979. Our decades of experience working with all aspects of business telecommunication technology throughout all of the innovations and changes of the information age have allowed us to become the best possible solution for your business telecommunication needs. Our goal is to provide purchase support and technical service that is unmatched. Network Telecom operates in the following cities: Kitchener-Waterloo, Cambridge, Guelph, Milton, London, Toronto, Woodstock, Mississauga, and Chatham. Click here to contact Network Telecom today.

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