What is a Hosted PBX? How Does it Work?

The world of business telephony is in the middle of a significant step-change, affecting the way we communicate and collaborate with our colleagues, partners and customers.

While the pandemic accelerated the move to hybrid working, many businesses have already switched their calling from an on-site solution to one that lives in the Cloud, in the form of a Hosted PBX.

And considering all the technological advancements coming soon, there’s good cause for businesses of all sizes to follow suit. So, what is a Hosted PBX, how does it work, and is it right for you? Keep on reading to get answers to all three questions, and more!

Here’s what we’ll go through:

What is a Hosted PBX?

Before we get to hosted PBXs, let’s agree on what a Private Branch Exchange (PBX) actually is:

A PBX phone system allows you to take advantage of all the same calling features that large Enterprises use. This includes the ability to handle as many calls as you can take and make, as well as extension dialling and a range of call management features, including:

  • Auto-attendant
  • Call routing
  • Call queueing
  • On-hold music capabilities

A Hosted PBX is exactly the same, but delivered as a hosted service, which is also called a Virtual PBX.

Hosted PBXs still allow companies to take advantage of all those features, but also offer a lot more. And rather than going straight to the vendor, if you partner with a Managed Service Provider like Future Voice, they’ll manage the platform, ensure it’s secure and up to date at all times.

There are three ways a hosted phone system can work; either over the Public Switched Telephone Network (PSTN), over your internet connection (Hosted PBX), or a combination of the two.

Though, we certainly wouldn’t recommend using a PBX over the PSTN, as that network will be deactivated in 2025, as part of Openreach and BT’s plans to switch the UK to an entirely fibre-based network

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How does it work?

No matter how you run your calls, the principle is the same. Your voice gets turned from an analogue wavelength (what you hear) into a binary signal (1s and 0s) which is then transmitted to the listener on the other end, where the reverse happens.

Now here’s where things get a bit more complex…

Traditionally, your home or business line would use the PSTN network, where your call would go from your site to a local exchange, which would route the call to its intended destination. But this equipment is ageing, getting hard to fix and can’t cope with all the traffic that needs to be sent. Which is why many businesses have already transitioned to an internet-based form of telephony.

Instead of your call being directed by a local exchange, the call is routed by Cloud-based servers that could be anywhere in the world (though would typically be somewhere in between caller and receiver).

Here, the server does the same job as the exchange, ensuring the call gets to where it’s going. But it’s also where the magic happens. Those same servers can use their computational power to ensure call quality is as good as can be, calls are secure and recorded automatically, while also allowing for other features such as presence notifications, dialling-in from traditional handsets and video calling, all in one go!

What are the benefits?

Reduce costs

There’s no need for a large CapEx investment at the start of your journey, because 99% of the hardware is in the Cloud, owned by the service vendor. You can also save money with far lower maintenance costs, considering there’s no hardware to fix if it goes wrong.

Call costs are significantly cheaper as you’re running your calls through your internet connection, plus some Hosted PBXs (such as 3CX) don’t even charge per line, they charge for the number of concurrent calls you receive, so you’re only ever paying for the calls you make and take.

This is ideal for large offices, retail and hospitality businesses, as well as schools and healthcare sites, where the majority of lines go unused, but are essential in the heat of the moment, saving up to 80% compared to a legacy solution!

Remove office boundaries

Employees can work from wherever they find themselves, which is perfect for remote working, as well as your field sales team and any staff that need to be consistently available.

And if you operate multiple offices, your sites can be connected by the same system eliminating inter-office call charges.

Secure communication

Because the systems is maintained by the vendor, you can rest assured that all possible physical and digital security policies are airtight, meaning less chance of your data being lost or stolen. And if someone accidentally deletes everything, Disaster Recovery is also faster and more seamless.

Scale with ease

Hosted PBXs make it super-simple to add or remove lines, as well as extensions, as you require. This means minimal admin, and only having to pay for the lines you actually use.

Easy to manage

With all the customisations available in an easy-to-use portal, pulling reports, adding lines and changing other settings like on hold music can be made in minutes, rather than days.

Advanced collaboration

Keep your team connected from anywhere, with the ability to collaborate on documents and calls as well as instant messaging, to establish a virtual office that’s just as accessible as your physical one.

Maximise your corporate image

Using a hosted phone system will give callers the impression of a larger operation with an incredibly professional communications system.

A hosted PBX could save you up to 80% over your current bills!

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On-premise Vs. Cloud

Deciding whether to go on-premise or hosted largely depends on your infrastructure, budget and goals.

If you already have a fibre-based internet connection, with enough bandwidth to facilitate your network, security, power and server needs, an on-premise solution is viable. But that doesn’t mean it’s the best option.

The only scenarios where we’d recommend an on-premise PBX is if regulatory or compliance restrictions prevent data being hosted off-site, or if the site’s location prevents it from accessing a reliable, high-speed connection. Or, if an operation has recently invested in an on-premise solution, where a solution like 3CX would allow the business to provision for the exact resources required, while still enabling a seamless remote working experience.

If you’re on a budget, a relatively small business or looking future-proof your calling, a hosted solution will be best – in fact for 95% of businesses, it’s the right call.

Then the main consideration becomes ‘how much control over your communications system do you want to keep’?

If your company already has an in-house IT team, then you’ll be able to manage the platform without any external support. But, if you don’t have the expertise or time, partnering with a Managed Service Provider, that can take that responsibility from you and manage the platform themselves, would be a wise strategy.

But before you go diving in, you need to ensure your internet connection will have the available bandwidth to run your calls. If you’re already on a fibre-based connection, that should be fine, depending on the number of staff. But this is something you can discuss with your Managed Service Provider as you explore your options.

Is a hosted PBX right for me?

In a word – yes.

As we mentioned previously, the PSTN network that you may know better as the ‘landline’ will be deactivated by the end of 2025, so if you did invest in an on-premise PBX that’s PSTN-based, you’re only going to get 3 years’ of value out of a very expensive solution.

Hosted solutions generally operate on a monthly subscription model, meaning you can add or remove new lines when you need to, so you’ve got more control and predictability in your billing.

Though, for the ultimate in cost-reduction, 3CX’s concurrent licences mean you only ever pay for the number of lines you’re using at any time, so you only pay for the calls you make and take.

Though it’s important to check the small print when it comes to features like call recording. Even though the price of cloud storage is continually falling, many Managed Service Providers will only store recordings for 30-days, which may not be long enough for certain operations or industries.

So, if you want to explore your calling options, and prepare your business for the 2025 switch off, get in touch for a free quote! Whether an on-premise or Hosted PBX is right for you, we’ll make sure you have all the information to make the best decision.

And, as experts in unified communications, voice and data connections and mobile technology, you can rest assured we can deliver all aspects of your solution, with a strategic approach and open, honest communication from highly-skilled personnel.

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