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Hosted Vs. On-Premise PBX – What’s the Difference?

October 6, 2016

Moving forward from your legacy system is a no-brainer. The advantages of scalability, enhanced security, constant updates, and workforce mobility are clearly a win for any business. But how do you decide whether to host on premise or off site? What are the differences?Here is some info to help you sort it out from VoIP-Info.org.

What is Hosted Phone (PBX) ?

Hosted Phone or hosted VoIP, otherwise known as an Internet phone system, is one where the provider is responsible for housing the IP-PBX as well as handling the technology required to provide the services to the phone system. The desk sets will plug into a router and the calls, signaling, and features are handled through an IP-PBX server at the provider’s location. The provider of the hosted phone charges a monthly fee that is inclusive of a minutes package and potentially certain features. Charges can also be at a per minute calling cost. Either one can be affordable depending on the rates. A company that knows the amount of minutes spent on the phone in a given month can make effective cost comparisons. Extended features may come with additional cost.

What is On Premise PBX?

On-premise PBX is also known as an IP-PBX phone system. It is similar to a traditional PBX system that resides at a location, such as a computer equipment room or phone closet. The signaling is done with an IP phone to the IP-PBX server using a LAN. Calls can go through a traditional phone company as well as voice over Internet (VoIP) using SIP trunking. Gateway cards are used to connect the system to the traditional phone company provider. The provider can be the one that already provides service, though a SIP trunk can be configured for use with an Internet service telephone provider (ISTP).

Benefits of Hosted:

  • Lower initial equipment cost and set-up cost
  • Upgrades and new features are included
  • New feature installation is handled by provider to avoid confusion
  • Picking and canceling virtual numbers is easy and fast
  • Moving a phone system is easy. IP phone is plugged into a broadband connection.
  • Hosted provides edge border controllers or various other kinds of NAT software to help navigate routers
  • Patches and upgrades of the IP-PBX are handled by the provider
  • Loss of Internet or catastrophic event has no effect on operations because calls can be sent to voice mail or a mobile phone. This is because of redundancy within an off-site facility that has safeguards including back up power sources.

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Benefits of Premise-Based:

  • Lower monthly cost after expenses are covered
  • Ability to SIP trunk to get lower cost calls
  • Having on premise PBX gives user control to create, adjust and delete users as desired
  • New open source feature sets can be added without any license fees
  • Current carrier does not have to be changed
  • VoIP trunks can be added to save on calling costs
  • Server ownership reduces expenses over time
  • With SIP trunking, loss of Internet or catastrophic event has reduced affect on operations because calls can be sent to another number or a mobile phone. This is because of failover within an off-site facility that has safeguards including back up power sources.

Both come with their own challenges as well. We’ve outlined a few here:

Challenges of Hosted PBX:

  • Clients need to prepare or check their cabling and network to make sure they can support a Hosted Phone System
  • Cost will remain for the length of the life of the phone service.
  • Additional bandwidth and network modifications may be needed. SD WAN is a good option as well!

Challenges of Premise-Based PBX:

  • Often when the phone system needs modification or repair, a repair company has to be called in which requires trip charges, repairs, and /or maintenance fee above the initial purchase
  • Phones can become outdated
  • Multiple modules within the phone system can cause outages that impact calls from getting through.
  • Phone service is separate from phone system in premise-based environments.
  • If a client is in a growth mode, they may grow out of space

So how do you know which to choose? Talk to an expert. Corporate Technologies Group has years of experience in all levels and types of telephony, networks, and communications. We can help you find a solution that works best for your business now and into the future.

Unsure if your system is due for an upgrade? Contact us today for a free consultation!