On premise PBX vs cloud PBX/Hosted (UCaaS)

On premise PBX vs cloud PBX/Hosted (UCaaS)

Whats the difference between on premise and cloud PBX?


An on-premise PBX (Private Branch Exchange) is a business phone system physically located within the organization using it. This system includes hardware and software owned and managed by the organization. The PBX handles the management and routing of incoming and outgoing calls within the organization's phone network, while the external phone lines are purchased and managed through a voice carrier.

For example, when an external call comes in from someone who dialed your company’s phone number, the call is directed to the local PBX. The PBX then routes the call through a welcome menu or ring group, eventually reaching the end user's handset. Conversely, when making an internal call from one extension to another, such as calling a colleague, the call remains within the local phone system and does not leave the local area network.



 
A cloud PBX is a phone system hosted and maintained off-site by a third-party provider, typically in data centers. This system is accessed and managed via the internet, so the organization does not need to own or maintain any physical PBX hardware or phone lines. The provider handles all aspects of the phone system, including upgrades, backups, and security. While physical handsets (phones) can be used with a cloud PBX, they are not necessary, as most cloud systems offer the option of using softphones—virtual phones that can be downloaded onto PCs or mobile devices to make and receive calls.

Unlike an on-premise PBX, when someone dials your company’s phone number with a cloud PBX, the call is handled entirely by the same service/system. Similarly, internal phone calls use the same VoIP protocol to make and receive calls, with the phone system operating over the WAN (Wide Area Network).


Key Differences Between an On-Premise PBX and a Cloud PBX

  1. Handling of Phone Lines:
    • On-Premise PBX: Separate phone lines are typically required for each concurrent call that the organization wants to make or receive. These lines may need to be provisioned and managed separately, and the organization may have to work with a telecom provider to set up and maintain them. for more information about phone lines and how they work see the following article Phone Services Explained​
    • Cloud PBX: Uses virtual phone lines, also known as VoIP (Voice over Internet Protocol) lines. These virtual lines are provisioned and managed through the internet and come bundled with your cloud PBX system.
  2. Local Phone Calls:
    • On-Premise PBX: Even if your internet or external phone lines are down, you can still make and receive calls from one extension to another within the local system, since the phone system is on-site.
    • Cloud PBX: If you lose internet connectivity, internal phone calls won't work either, as the system relies on the WAN (Wide Area Network) to make and receive calls. However, a cloud PBX is always accessible via any network connection. If there is an outage at your office, you can access the phone system on any internet-connected device. Additionally, features like welcome menus, greetings, and settings will still function, unlike an on-site PBX, which becomes completely inaccessible if the physical system goes down.
  3. Features and Functionalities:
    • Cloud PBX: Generally feature-rich, as it is software-based and continuously updated with new features and services.
    • On-Premise PBX: Requires physical updates and may not receive new features as frequently.
  4. Accessing Your System:
    • Cloud PBX: Can be accessed from anywhere using an easy-to-use online portal, since it is cloud-based.
    • On-Premise PBX: Needs to be accessed through the network the phone system is on, and many on-premise systems may not have an online portal. Access often requires physical presence or a direct network connection.

  5. Price:
  1. On-Premise PBX: Is physical hardware that you need to purchase, which is generally a costly item
  1. Cloud PBX: Is usually priced like a SaaS (Software as a Service) service, where you pay per user per month. In scenarios with many users, it may be cheaper in the long run to buy an on-premise system one time rather than paying monthly fees


    • Related Articles

    • Understanding onsite PBX vendor roles

      Our guide on understanding Onsite PBX (Private Branch Exchange) and the reasons behind having separate vendors for PBX systems and phone lines. If you've ever wondered about the roles of these vendors or encountered confusion when reaching out to us, ...

    • Phone Lines Explained

      What are the different types of phone lines available today for on premise phone systems. Under the phone line category, we have two main branches: Onsite VoIP: Alternatively known as "SIP" this configuration places a physical phone system on the ...

    • Deciphering Carriers and Service Providers

      Understanding the Roles of Carriers vs. Service Providers: The Evolution of Phone Numbers In exploring the dynamics between carriers and service providers, it's crucial to grasp the fundamental workings of phone numbers. While the concept may seem ...

    • What is 10DLC & TCR Registration, and what does it mean for my business?

      In this article, we will review what 10DLC TCR is and the process for registering a business phone number to send and receive SMS and MMS (texting) What is 10DLC TCR? 10DLC, or 10-digit long code, is a channel created by mobile carriers for ...

    • Telecom acronyms and their meaning

      Common Telecom Terms and What They Mean LEC, ILEC, and CLEC These acronyms describe various phone and internet carriers, each with specific roles and distinctions. LEC (Local Exchange Carrier): This is the local company that provides phone and ...