Select Sidearea

Populate the sidearea with useful widgets. It’s simple to add images, categories, latest post, social media icon links, tag clouds, and more.
FAQ     Blog   

Hosted Phone Systems VS Premise Based PBXs

Hosted Phone Systems VS Premise Based PBXs

The pros, cons, and considerations to this new technology

Recently I was asked to help evaluate a client’s options for phone systems; they were looking for assistance in how to decide between the Avaya IP Office phone system and a hosted PBX system from their current phone and internet service provider.  I thought our blog readers may be interested in (and benefit from) our analysis.

I had a chance to review the proposal that you sent over and wanted to take the opportunity to provide you with some feedback on how to make a decision on which system to purchase.

The company in review is proposing a hosted PBX (Private Branch Exchange or a fancy way of saying phone system), which means that the phone system would not reside in your office space. This is a newer technology which enables you procure traditional telephone system features as a monthly service in place of having to buy a phone system. Here is how the technology works:  IP phones (at your office) would be connected through the internet back to the service provider’s central office using Voice over Internet Protocol (VoIP) technology. From there your call would be managed by a phone system (or piece of software) that is shared among several of the service providers customers. This system would convert your VoIP call back to a traditional analog signal and out across the PSTN (public switched telephone network) so that non-VoIP users could communicate back and forth. Because each of your IP phones is connected to the same central switch you would be able to get all of the same features that would traditionally be available if you purchased a PBX and installed it in your office space.

Wikipedia defines Hosted PBX as:  A system that delivers PBX functionality as a service, available over the Public Switched Telephone Network (PSTN) and/or the internet. Hosted PBXs are typically provided by the telephone company, using equipment located in the premises of the telephone company’s exchange. This means the customer organization doesn’t need to buy or install PBX equipment (generally the service is provided by a lease agreement) and the telephone company can (in some configurations) use the same switching equipment to service multiple PBX hosting accounts. http://en.wikipedia.org/wiki/Hosted_pbx#Hosted_PBX_systems

There are several positives and negatives to this new technology of communication; below are just a few for you to consider.


  • No hardware to buy or maintain: equipment is typically included, leased, or rented.
  • Streamlined cost of ownership: one provider to pay
  • Some disaster recovery benefits – if there is a problem at your office you can communicate from anywhere –traditionally hosted PBX providers are located in data centers which offer optimal conditions to house a communication system.  
  • Single point of contact for all aspects of your communications system: installation, maintenance, financing, and phone and internet service.



  • Phones will place a strain on your  internet connection – every simultaneous phone call that you make will  take about 35-64K of bandwidth (usually factor about 1 channel of a T1 per call) so you will most likely need an additional T1 for every set of 20 or so phones that you are planning on using at the same time.
  • Phones are 100 % dependant on the internet – this means if that goes down or there are any computer networking problems at your office, you run the risk of having a total failure of all your communication systems.
  • Hosted PBX’s are still rather new and are not perfected yet; a lot of people see this as a new revenue source and are jumping on the bandwagon unprepared. Oftentimes they do not have the technical resources or infrastructure in place to install, support and maintain them. I would strongly recommend considering this point carefully – take the time to investigate the company you are looking to work with.


Teltek, as you know, has provided communications architecture consulting, telephone system installation, maintenance, and cabling for over 50 years. We also source the best and most competitive phone and internet service companies for our clients and work with their existing technology vendors to ensure a seamless and cost competitive end product.

For more information click here:

Teltek Blogger

Let’s get your business tech you can trust.

Find the Perfect Phone System