PBX (Private Branch Exchange) is a private telephone network which is designed for within organization use. Any business which uses PBX can connect more phones compared to the physical phone lines. In additions, all the calls within the office are free with PBX. Also, PBX can provide extra features including call transfer, voicemail, interactive voice response (IVR) menus, automatic call distributor and call recording. Since a hosted PBX or cloud PBX system provides a lot of additional features compared to the traditional phone lines or an onsite solution and they are also cost effective a large number of businesses have implemented hosted phone system. If you are considering switching to PBX then it is important that you understand which kind of hosted system telephone is actually suitable for you. Hosted or cloud PBX, you have to know and have basic knowledge about each type of PBX.

What is a hosted PBX system?

A hosted PBX has the following features:

  • All the equipment is handled off-site. A PBX hosted phone system service provider almost will run all of the required services at a remote site. The service provider will also manage all the equipment and you will not have to invest in any hardware.
  • The service can be accessed through a direct network connection. or in simple words, the service will be provided through the internet.
  • All the features are uniform. since the service is set to a fixed size there is no flexibility of scaling up or down. Nonetheless, this also means that the service is consistent.
  • The hosted PBX is generally pay-per-seat. For instance, if you have more than fifty workers then you will pay for the amount of server space and the infrastructure usage required for fifty workers.

What is a cloud PBX?

Even though a cloud PBX is like the hosted PBX, but it is not completely identical. it has the following features:

  • The service provider will run the service in the cloud. this means that there will be no physical off-site location where the service and other equipment will be kept.
  • It is scalable. Cloud PBX has room for flexibility with respect scaling the services up or down.
  • Spikes in the demand can impact services. since it is a challenging task to foresee and manage the unexpected demand hence high demand can disturb other users on the same network.
  • A direct network connection will be used in order to access the service. similar to other cloud-based services, cloud PBX also is accessed through the internet.
  • The Storage capacity might be Limited. according to the number of users the assigned storage space can quickly be used up.
  • It is usually pay-per-usage. rather than paying for the number of users, cloud-based system usually is billed depending on the service usage.

Cloud PBX

In cloud PBX the service provider hosts the Software, Hardware and also maintains your phone system. Your business only has to connect the handsets to the network. The quality of call might vary based on the network connection. Your service provider will handle all the updates and maintenance of your system. Cloud PBX service is best for small or medium size businesses which are experiencing growth and want a scalable solution. With cloud PBX there is:

  • Minimum setup
  • No maintenance
  • Monthly fees
  • If new phones added, then the monthly cost increases
  • Fast implementation

Onsite PBX

All the hardware will be at your physical location and the calls will get passed through your server over a dedicated voice network connection. You will be able to manage the call quality with more flexible and customizable options. Onsite PBX is best for small or medium-size businesses which have an IT Department that can support the hardware and if they can afford the expenses. With the onsite PBX there is:

  • Upfront installation and Hardware cost
  • Maintenance of hardware costs
  • Service and support from the in-house IT Department
  • Lower TCO
  • Long implementation


What is the difference between cloud and hosted PBX?

Now that you have come to know all the basic characteristics of hosted and cloud PBX it is relatively easier to see the differences and similarities. Neither are both on-site solutions nor they need you to invest in a costly equipment. In addition, both systems are accessed through an Internet connection. However, that is where the similarity among both ends. Hosted PBX has uniform features which means you cannot scale up or down and it is pay-per-seat, making hosted system telephone a suitable choice for only established business which have a fixed number of workers and produce study volume of data. Cloud PBX solution on the contrary is scalable and it is pay-per-usage. This makes cloud PBX a suitable choice for start-ups and small businesses which are expanding.

Is there any other type of PBX system?

A PBX system can be referred to a site based, cloud, virtual, hosted or a hybrid solution.