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Hosted PBX vs. Traditional In house Solutions

In this article we discuss the key differences between a hosted PBX system in comparison to a more traditional set up so you can decide which is right for your company.

A Cloud Based Phone system which is also known as a “hosted pbx” is when the technology of the phone system is based on an external secure server which can then be connected by businesses via the internet. This allows it to be feature rich at a low cost freeing up time and resources in the office spent on managing and maintaining it in-house. Hosted solutions usually have a low or no upfront fee and typically work on a pay per user/month basis. This option is great for small businesses, for example up to 20 users, but exceeding this number it is worth looking in to purchasing the technology and having an on-site server.

Working at a touch of a button

The whole unit is usually controlled with an online portal which allows adding or removing of users at the touch of a button and changing the direction of the calls giving greater flexibility than traditional analogue. This flexibility enables easy remote working; you can answer the same call from your home as if you were physically sat at your desk. If you need to co-ordinate remote workers, this is a great option.


Key Advantages


      • Low Call Costs – Since the system is based on VOIP, call costs are often a lot cheaper especially international calls. It is worth scrutinising your businesses call requirements as, just like with mobiles, free minutes can be included in the months costs, saving you money if you actually use them, but make the monthly subscriptions higher.
      • Remote Working – True flexibility of location is key, at a touch of a button you can redirect calls to any location allowing you to work from home, whilst travelling and easily connect remote workers as one synchronized unit.
      • Low Set Up Costs – There is no expensive equipment to purchase or install, all of this is external and connection charges are on a  monthly basis
      • Rich in Features – Hosted technology has brought the feature rich functions of an expensive traditional business system, previously only available to large business to the small business user. Features like auto attendant (virtual receptionist), extension numbers, hold music and the easy transfer of calls gives your business a great professional image.
      • No line limits – Traditional PBX is limited by the number of physical lines assigned to handle incoming calls. With VoIP, even if every phone is occupied, incoming callers will still at the very least reach voicemail. The same thing goes for when the Internet is down. As long as there are no issues on the host provider, your callers will never ever get a busy signal.


Switching to a hosted VoIP system is fairly easy but there are some things to consider to make the move seamless and problem-free as possible. Here are a few things you need to think of before moving your whole operations to the cloud.

Quality is key!

Whilst the technology is available to ensure your VOIP based calls have the same quality as landline calls, some low cost companies may not have a good enough network to support business calls resulting in jitters or echos on the line. Low call quality not only lacks professionalism, but is annoying for the business and customer, making a working environment pretty difficult. To ensure top call quality check whether the service provider sends the calls on its own network that prioritises voice data; rather than sending the calls across the internet. A service provider should be able to guarantee the quality of the calls.

A good internet connection is essential.

The speed of the internet or bandwidth that is required depends on the number of users that will be connected and how many calls are needed to be handled at one time. Any decent service provider will be able to talk you through the speed you need based on your requirements but it is essential to make sure you have sufficient connection for your requirements. There are tests you can do once the system is connected to ensure that with the maximum number of calls you still receive great call quality; this ensures you are not caught short during busy working hours.

If your internet goes down, so do your phones

The sole downside to a cloud-hosted VoIP is that when your WAN connection goes down, your phones also go down. You can alleviate this problem by having dual system in place should you have an unreliable service, frequent power cuts, a poor internet service is something not to be sniffed at.

Whilst a hosted solution is the way forward for small businesses there are some points to take in to consideration before letting go of the traditional analogue system.

If you can’t let go of faxing

In this age of emails, social networking and smartphones, it is really very surprising to see some companies that still use fax machines for their daily operations. The reality is that not everyone can say goodbye to this old technology just yet. Examples of industries that still use faxing are medical offices, real estate agents and even the US Pentagon. So, yes,  if you are still holding on to this old technology, you are not alone. You will not be able to used traditional fax machines with a VOIP line, instead try virtual faxing; many of the top business service providers include a service to receive faxes and then forward then by e-mail. This setup is easy, it works well and saves you paper.

If you want your physical fax machine to stick around, be sure to work with a provider that can convert analog landline jacks into Ethernet connections using an ATA adapter. RingCentral and 8×8 offer this capability. This option is available so inquire from your VoIP provider.

Credit Card Terminals, Alarm Lines and other Legacy tech that hate VoIP

In general, alarm system landlines cannot be converted to use VoIP. Credit card terminal swipes that go over a landline cannot also be converted. For the most part, anything that isn’t a desk phone or fax machine cannot be converted to use VoIP technology.

If you need to use these equipment, you may need to keep some legacy landlines in place. Another option is to just move away from reliance on landlines. If you have landline alarms, just switch to cellular based systems. On the other hand, most modern credit card terminals have data jacks so you can plug the device into any standard LAN port in your network. Just configure the box for IP transmission.

Which phones do I need?

You will need phones that work with VOIP technology, you should check with your provider if your current phone supports VOIP since a lot of modern phones do. If you already have a phone system and want to convert it to VOIP it is possible to use an adapter, IP phones however are relatively inexpensive to buy with a wide range of functions depending on what is required required. You can choose from traditional desktop style phones with a wide array of functions or a headset connected to the computer. The choice will depend on what functions are required; in a call centre environment for example headsets are the best set up as they speed up the making and receiving calls.

SIP-based desk phones are almost universally supported now

There are many providers that support SIP based VoIP which has become the open gold standard for desk phone services. Cisco products rely pretty much on their own SCCP protocol that require special phones. These phones are usually expensive.  RingCentral, 8×8, Polycom and Avaya also make great SIP handsets.


Cat3 cabling is out

If you still have Cat3 cabling infrastructure from your existing PBX, you need to invest in Cat5e or better for your new data lines. There are no ways around this. There are wireless VoIP phone solutions that you can get but they are not so great. There are hybrid solutions that can tie into old PBX lines but they make the system more complex and won’t solve the long term problem. These are only temporary solutions.

There are many things to consider when making the move to VoIP. The important thing is to sit down with your IT team and your provider to come up with the best solution to take advantage of your current setup and your investment money.


Author: Yazz

Yazz is a trained telecommunications engineer with a diploma in telecommunications. He has spent the last 15 years working for Telefonica, one of the largest telephone operators and mobile network providers in the world.