What is a Hosted PBX Phone System?

Sooner or later, most busy entrepreneurs or business owners hear about hosted PBX phone systems, and perhaps the positive chatter has you intrigued. Can such a system benefit your company? 

In order to decide whether you should invest in a company phone system for the first time, stick to what you’ve got or throw out the old for a hosted system, it’s essential to first have all the facts. 

Below, you will find everything you need to know about hosted PBX phone systems, including what they are, how these networks operate and who needs them. By taking the time to review all the features and capabilities of a hosted PBX system, you can get a better picture of what benefits PBX might bring to your business.

Table of Contents

1. What does hosted PBX mean?
2. What is the difference between hosted PBX and cloud PBX?
3. Should I switch to a hosted PBX phone system?

What does hosted PBX mean?

When it comes to PBX technology, there are essentially two groups. The more traditional PBX phone systems rely on copper wires and landline phones to operate, and in the tech world, this older variation is simply referred to as a “PBX phone system, or an on-premise phone system”.

When someone mentions “hosted PBX”, what they’re talking about is a popular alternative that allows companies to make and receive calls via the internet instead.

What are hosted PBX phone systems?

The term PBX, or Private Branch Exchange, was coined when the first business phone systems were created – essentially, what it means is that any phone system with the PBX tag is a business network. 

A hosted PBX phone system is still a business network, but here’s what makes it so different and popular. Since it’s hosted by a third party, your telephony supplier usually, it doesn’t take up a lot of physical space on your own business premises. The only hardware that is on-site is the phone handsets. Everything else is off-site, so you’ll have more office space as well as in-house server space. 

The primary benefit is that you don’t need to worry about software updates, equipment ageing or inability to up or downscale as required. 

Most businesses also don’t employ IT specialists to maintain their cloud phone networks because a hosted PBX system is kept updated (these happen automatically and are usually free) and healthy by the host company you purchased the network from. 

This means that you’ll save on expenses by cutting out extra salaries and pricey call-out fees.

What is a hosted PBX phone system used for?

With a hosted phone system, your staff can use the handsets to make and receive calls at the office; but, many businesses also use a hosted PBX phone system for its excellent remote support. 

Employees who are travelling off-site or working from home can still access the system via the internet and continue to work without interruption. 

A hosted PBX phone system is also used to reduce overall costs that are commonplace with any company’s communication system. Expenses like maintenance, hardware purchases or replacement, server space and extra employees are all growing but, most of these costs can either be reduced or eliminated when you switch over to a cloud-based PBX network.

What is the difference between hosted PBX and cloud PBX?

Hosted PBX, cloud PBX, virtual PBX and IP-based PBX are interchangeable terms for the same thing – in other words, there is no difference between a hosted PBX system and a cloud PBX phone network.

How do hosted PBX phone systems work?

Once you peek under the hood of PBX phone systems, only then can one truly appreciate the finesse of these networks and better understand why they are becoming increasingly popular with small and big companies alike. 

Once you switch to a hosted PBX network, your communication infrastructure is moved over to a VoIP provider, and all your phones will be either adapted to function as cloud phones or they will be replaced with VoIP desk phones. 

The resulting cloud-based PBX system uses IP communications to make and receive calls over the internet. Interestingly enough, data transfer in hosted PBX systems can happen in three ways. 

• The data is transported across the Public Switched Telephone Network (PSTN).
• Information can also be sent over the internet via VoIP technology.
• A combination of both PSTN and VoIP technology.

An example of how internet/VoIP technology comes into play is when you plug your office phone into a VoIP-enabled modem, a device that relies on connectivity in order to send data. 

Once you make a call, the information uses the IP network to reach the cloud. Upon arrival, it connects with your provider’s data centre or server before the call is pushed back out into the cloud again and delivered to the person you are calling.

How much internet bandwidth do I need for hosted PBX?

In most cases, businesses with a high-speed broadband connection will do just fine for hosted PBX, as long as each phone line is rated for at least 100 kbps (this stands for both upload and download). Also, when your employees are working remotely, it’s worth noting that they won’t succeed with a low-cap bandwidth, especially when they need to make a lot of calls. 

Since hosted PBX was designed to work solely with connectivity, it remains very vulnerable to the moods of your internet connection. Simply put, an internet outage means that your hosted PBX phones won’t work until you restore the connection.

For these reasons, it’s essential to check that you have the right bandwidth to support the continuous transmission of data that is required for your hosted PBX phones. 

Before you go out and make any changes, it’s best to get an expert’s opinion. After assessing the needs and size of your business, we will be able to accurately calculate just how much bandwidth you really need.

How do I know if my business needs a hosted PBX phone system?

Perhaps your old phone system is handling the office workload not as well as you’d like, but not so bad either that you’re convinced to adopt a hosted PBX phone system (and all the costs that come with it). 

The good news is that the fees are chopped up into affordable packages, and PBX installation won’t disrupt your day-to-day business operations. So, how do you know when it’s time to say goodbye to the old ways and accept a newer, cloud-based phone network?

Wasted Space

If your office landscape is littered with eye-sore servers, too many landline cables and clunky handsets, then it might be time to switch to a cloud system.

Since almost everything is hosted in the cloud, there’s no need for physical servers to be present on your business premises, and the number of cables will be drastically reduced and sometimes even entirely eliminated.

Disrupted Office Continuity

In today’s busy business world, one cannot afford to lose hours every day fighting a communication system that glitches, delivers poor-quality audio and connections or suffers downtime because of cable failures.

If this describes your business, then a hosted PBX system can protect your office’s continuity. As long as it has a strong and stable internet connection, the network will remain consistent and reliable.

Growing Costs 

Traditional phone systems, including on-site PBX, have expenses that a cloud-based network doesn’t. It might be time to change if your older system is racking up the costs due to maintenance issues, or constantly forcing you to acquire more server space and system updates. 

One of the reasons why hosted PBX is becoming increasingly popular is the fact that a lot of costs that used to fall on business owners are now becoming the responsibility of your provider. Indeed, they deal with updates and maintenance at little cost to you and in most cases, do so remotely.

Your Business is Growing

Hosted PBX phone systems are extremely flexible. If your business expands, the network can painlessly grow with it. You can easily add more features and phones as needed.

On the flip side, cloud-based PBX can also be scaled down just as easily to fit a business that is downsizing. More traditional phone systems tend to be more costly or too inflexible to expand or contract as needed. 

Who would benefit from hosted PBX?

In a nutshell, everyone from business owners to staff and customers can all benefit from hosted PBX. As an owner, you will definitely save on costs that include labour, maintenance and upgrade expenses.

Since a hosted PBX network is also very reliable, customers can be assisted quickly when they call to make a query or place an order. Employees are also more likely to appreciate the seamless flow of this system, which reduces friction and discontent in the workplace. 

Also, any business that currently struggles with temperamental older phone networks that cost too much and cannot grow with the business will also benefit from adopting a more flexible, cost-effective and dependable alternative like hosted PBX.

Should I switch to a hosted PBX phone system?

Below are some of the top reasons why people decide that making the switch to a cloud PBX network is the right move for their business. Perhaps, something on this list will resonate with your own situation.

Lower Up-Front Costs

Should you decide to upgrade your phone system, there are many options available other than hosted PBX. However, with a hosted solution, the up-front financial investment is substantially lower than most other choices.

Since you don’t have to buy any hardware, software or any other additional equipment, you can either save the expense or choose to put it back into another area of your business.

You Need a Mobile Solution

Older systems are notorious for chaining workers to a physical location. If your landline system or on-site PBX is messing with the mobility of your business or temporary remote workers, then it might be time to change.

Moving your hosted PBX phone network to new premises is as easy as packing the handsets in a box and taking them to the new location.

Improved Call Quality

Not being able to hear clearly during a phone call can frustrate both the caller and the person on the other end of the line. If this is an issue that keeps cropping up in your business, then you might want to consider switching to a cloud-based network.

VoIP and hosted solutions are known for improving both call quality and connectivity. Your staff will stop dreading calls and work more efficiently. 

Avoid In-House Interruptions

When a telephone exchange is hosted in-house, it becomes vulnerable to local risks that can interrupt service continuity. For example, a fire might damage the wires, or a natural disaster hits the building and damages critical equipment. 

If you live in a risky building or area, then it might give you better peace of mind to hand hosting over to a dedicated off-site partner. This can be a game changer when you need to call for help during a situation that normally puts phone systems out of service.