What A Hosted PBX (Private Branch Exchange) Looks Like in 2021

Over time, organizations in every sector from education to health care have migrated more and more of their business-critical IT infrastructures and applications into the cloud — and business phone systems have been no exception to this trend.

The traditional private branch exchange (PBX), hosted on-premises and operated and maintained by the end customer, has given way to newer, more scalable and economical solutions from hosted VoIP providers. These offerings are collectively categorized as hosted PBX services.

What is a hosted PBX?

A hosted PBX is a phone switching system in the cloud. It may also be known as a virtual PBX. As a hosted solution, all of its key infrastructure resides within the service provider’s data center (i.e., its cloud) and is fully managed there. That means customers don’t need to engage in complex, time-consuming and costly setup and ongoing maintenance. Hosted PBX users access the service via the internet. In addition to actual phones, they may also be VoIP soft phone clients available for an internet-connected PC, tablet or other device to use the solution.

Similar to a traditional PBX, a hosted PBX connects all of the different internal phones and users within an organization, while also enabling those users to share a limited pool of phone numbers and lines for making external calls, instead of requiring each of them to have their own dedicated line. That outside connectivity enables the PBX to interface with outside call sources such as the public switched telephone network (PSTN) and, in the case of a hosted PBX, the internet. 

How a hosted PBX system differs from a traditional PBX

The main difference between a traditional PBX and a hosted PBX comes down to where the PBX infrastructure is located and how it connects to end-user devices like desk phones:

• In a traditional PBX (also known as a legacy PBX), calls are transmitted over circuit-switched networks, in either analog or digital format. Circuit switching provides a dedicated connection for each call, which can lead to stable call quality, but at the price of inefficient bandwidth usage and no internet connectivity.
• In a hosted PBX, phone service becomes just another type of packet-switched network traffic, carried over the internet. Every call is transmitted as a series of data packets, via infrastructure such as switches, routers and Ethernet cables. The service provider ensures that the hosted PBX solution reliably connects to the customer’s devices.

Because hosted PBX services use IP connectivity, the traffic to and from their data centers can flow over the same broadband networks that small businesses or enterprises have already set up for their other applications. A fully subscribed end user of a hosted PBX needs only internet connection on a device of their choice to make and receive calls.

For example, their office phone or PC may connect to the hosted PBX solution via the internet to make a VoIP call. This connection reaches the data center in which the hosted PBX infrastructure is housed, and, from there, the hosted PBX service switches the call to the appropriate line. Along the way, users can take advantage of numerous hosted PBX features, like auto attendants, unified communications (e.g., video conferencing and messaging), call recording and voicemail.

How does a hosted PBX work?

How a hosted PBX works depends on its configuration. There are two major types of hosted PBX: cloud PBX and SIP-enabled IP PBX.

Cloud PBX

In this setup, all of the desk phones and other devices — i.e., soft phone clients — in an organization connect via the internet to the hosted PBX provider’s data center. Setup and administration is streamlined, with most tasks — such as moves, adds and changes (M/A/Cs) — completable with a standard web browser or other application. Call routing and switching for all phone numbers happens in the service provider’s data center, in which the hosted PBX is based. There is minimal equipment for the customer to manage, as a M/A/C can be as simple as moving a desk phone to a new location and making corresponding updates via web.

A cloud PBX solution has virtually no limits to its functionality or flexibility, as software updates can continually modify how it works and extend its feature set. Meanwhile, the underlying cloud infrastructure makes it enormously scalable. A private branch exchange hosted in the cloud may offer:

• Unified communications: Voice, video, chat, meetings and more can be converged into a single platform accessible with an internet connection on any device. As remote work expands, UC solutions provide the rich functionality to support productive telecommuting.
• Auto attendants: An auto attendant is a virtual receptionist that automatically answers phone calls and provides a customized menu of options for the caller to choose from. These attendants help small businesses project a professional image to the outside world.
• Automatic call distribution: A hosted PBX solution may provide automatic call distribution, which involves routing calls to the best available agents to answer them at any given moment. In this way, the hosted PBX supports a cloud contact center solution.
• Call recording: Through a virtual PBX, organizations can record their calls securely and economically while complying with all applicable regulations in their local jurisdictions. The recording system itself is cloud hosted and provides scalable storage. Redundancy and encryption protect each recording.
• Application integrations: Hosted PBXes often come with integrations that let them connect seamlessly to other critical business applications, such as a customer relationship management solution or Microsoft Outlook. A hosted PBX may also integrate fax functionality, without requiring any bulky equipment or printing.

Moreover, the cloud PBX experience is flexible. Desktop and mobile devices can both connect to it via a soft phone VoIP client, and can do so even if the user is not directly on company premises.

SIP-enabled IP PBX

This configuration is a little more complicated, but it can be a good option for preserving the investment in an on-premises PBX, economically procuring multiple lines for a large office or simply phasing in the transition to a hosted PBX solution. The existing PBX and all of its features stay in place. The private domain of that traditional PBX then interconnects with the public domain of the PSTN and the internet, via a SIP trunk’s VoIP capabilities. Accordingly, the PBX is internet-enabled, hence the “IP” moniker. SIP trunking within a SIP-enabled IP PBX is possible through multiple interconnects, including DS-1 and Ethernet.

What are the pros and cons of a hosted PBX system?

To understand the pros and cons of a hosted PBX service, it’s necessary to directly compare it to traditional PBX in more depth.

Hosted PBXes require much less infrastructure and upkeep than a traditional PBX does. Their pivotal infrastructure is in the cloud, managed by the service provider and accessible via IP networks. They may interface with the PSTN and the internet, either natively or by way of a SIP trunk.

In contrast, a traditional PBX requires significant hands-on attention from the customer. Its equipment is located on-premises, self-managed with the periodic site visit from the vendor and accessed through circuit-switched phone lines.

With these differences in mind, here are some of the major pros and cons of each setup:

Hosted PBX Pros

• Cost-effective: No upfront costs, plus the plan is billed as ongoing operating expenditure.
• Flexible: Perform M/A/Cs with ease and seamlessly scale the system to thousands of users.
• Reliable: The PBX operator will likely maintain redundancies in its data centers, to keep the PBX solution running at all times.
• Simple: Never worry about complex maintenance again.
• Remote work-optimized: Support employees on mobile and desktop devices as they work from home.

Hosted PBX Cons

• Broadband required: A sufficiently high bandwidth connection is necessary for supporting the increased traffic from the hosted PBX.
• Ramping up users: End users may need time to adjust to the new hosted PBX solution.

Traditional PBX Pros

• Full control: The customer effectively owns the system and can customize it to their needs.
• Circuit-switched call quality: Every call gets a dedicated circuit and isn’t dependent on fluctuating quality of internet connectivity.
• SIP-trunkable: A SIP trunk can connect a traditional PBX to the internet alongside PSTN.

Traditional PBX Cons

• Expensive: Capital expenditures are considerable and ongoing maintenance is a must.
• Inflexible: M/A/Cs are painful and time-consuming.
• Limited: Features are relatively basic and require significant work to modify.
• No internet for VoIP or UC: Unless a SIP trunk is added to incorporate IP PBX functionality, a traditional PBX cannot access the internet.
• Complexity: Whenever an issue arises, the organization has to deal with it directly, often at great cost.

The following table provides a high-level overview of how traditional PBX and hosted PBX solutions stack up:

Telesystem can set up, operate and maintain a hosted PBX solution for your company in our secure and georedundant data centers and networks. Through hosted PBX, you can upgrade to a modern business phone system that scales to the needs of your business without introducing additional overhead, new maintenance costs or technical complications. Learn how you can harness the power of a cloud phone system by connecting with a member of our team today.