Premise PBX vs Hosted VoIP

Hosted VoIP vs. a Premise Based IP-PBX

Advisor sitting at desk ready to dicuss business phone systems.Even a small company can see benefits from having their VoIP phone system residing in their closet rather than 2000 miles away, but it depends on their use and business model. Benefits of an in-house IP-PBX can range from using multiple providers with different types of service to lower costs when averaged over several years. Or if your business requires certain features which can quickly increase monthly charges like call recording, then an in-house PBX will save money, even for a very small business.

Both Cloud phone service and an on-premise PBX have benefited from open source Asterisk. Hosted VoIP providers use Asterisk as their PBX software and the best affordable in house PBXs do also.

We have listed some of the pros and cons of a premise based business VoIP phone system versus hosted business VoIP or a cloud based phone system. These advantages should be weighed against the advantages of a cloud based system which can offer substantial benefits for small companies.

NOTE: Which type of system would be best for you will depend on several factors, including what type of service you may currently have and if you're tied in with a contract that would incur charges if you wanted out.

Benefits of a premise based business phone system

  • Lower costs over several years. With a premise based business Asterisk phone system the cost of hardware would be greater than hosted VoIP as there would be additional hardware needed. However, this additional cost would be off set over some period of time at which point the cost over time would be lower.
  • The ability to have two different types of dial tone service. For example many small companies have 2 or 3 traditional phone lines. They can keep 1 or 2 of these lines and additional lines as SIP trunks delivered over the Internet. If one type of service goes down, as would be the case from loss of Internet (SIP trunks would not connect), they would still be able to make and receive calls from their traditional CO lines.
  • Lower costs on some feature sets. Many hosted VoIP providers have additional charges for some features. For example, multiple attendants might incur additional charges. A call queue would also be an additional feature at an additional charge. Music on Hold or Message on Hold can typically incur an additional cost with hosted VoIP, if they offer it at all. With a premise based business VoIP phone system all these feature sets might be incorporated in the PBX software so would not cost anything additional once you buy the PBX.
  • More control and more flexibility over your phone system. Owning your own PBX (business phone system) allows you to have total control over its use and operation. Making changes to the system or changing VoIP providers is easier and can be quick to do.
  • Signaling over your own network (LAN) instead of over the Internet. When you transfer a call from one extension to another extension in the office the phone switch in the closet on premise makes that happen. All the signaling occurs locally just feet away instead of miles. With a hosted VoIP system a transfer from one extension to another takes place at the hosted provider's switch which would usually reside many states away. This increased distance caused a certain latency and also increases the need for a constant robust Internet connection. Although the voice traffic is the main user of bandwidth on any VoIP connection, eliminating all the PBX signaling can be an advantage, especially on days where the Internet connection is not as good as other days.

Benefits of hosted business VoIP

  • Lower upfront costs. Hosted VoIP requires less hardware, therefore the initial outlay of money is less than buying a premise based phone system. To be up and running with a hosted solution all you need is an account with a business VoIP provider and IP phones. The largest hardware cost are the phones. (This may be true with either hosted VoIP or a premise business VoIP PBX.)
  • Easier to set up off site phones or extensions. One of the great benefits of a hosted VoIP service is how easy it is to set up an extension or phone at remote locations. The provider's service depends on ease of connections and setup, therefore plugging in an IP phone and putting in the correct credentials should result in dial tone on that phone easily. Although, you can set up remote phones or extensions off site with an on premise business PBX it may be more of a challenge.
  • Maintenance and upgrades are handled by the hosted VoIP provider. You are buying a cloud based phone service with hosted VoIP. That being the case it is the provider who maintains the PBX, not you. They need to fix hardware failures and upgrade the versions of software just like any cloud based provider. Hosted VoIP limits your responsibilities.
  • Over the phone tech support. Tech support can be important if you need it and with most hosted VoIP provider's service packages, tech support is part of the package. Troubleshooting remote problems can be a challenge, but having the ability to call a trained tech who can help solve issues is a big part of hosted VoIP solutions.
  • No loss of service in the event of a catastrophic event at your business. Suppose a fire or flood affects your business and your equipment gets destroyed. To reestablish phone service with anon premise phone system you would need another phone switch and phones. With a hosted VoIP solution all you would need would be some IP phones and an Internet connection somewhere and you would be back in phone service/business. All the features, recordings and operation of your business phone system reside far away at another location, not affected by the catastrophe back home.

Take the best next step with an affordable in-house small business phone system, the Grandsteam UCM6202. Or if your thinking of moving your phone system to the cloud here are many reasons why it makes the best sense now in 2021.

Grandstream UCM6204 VoIP PBX  Choose Business Hosted VoIP


Choosing a cloud based phone service for a small company makes a lot of sense. 2021 will find more companies moving to the cloud.

Take this opportunity to get a Quote for Business Hosted VoIP.

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