A hosted VoIP PBX system is located in the cloud and is also commonly referred to as a Virtual PBX. This acronym is terminology dating from legacy phone systems and PBX stands for Private Branch Exchange. All of the management activities for a hosted PBX take place in the cloud, as opposed to being on-premise in a networking equipment closet.
This type of telephone service is very popular with both small and medium sized companies that typically require fewer than 100 lines and need features that only a virtual PBX solution can provide.
What is a PBX and what does it stand for?
Although it has already been stated that PBX stands for Private Branch Exchange, you may still be wondering what that actually means. Well the key word here is private as this is a piece of equipment that is actually owned by a company to enable internal calls to be connected without having to send them out to the PSTN (Public Switched Telephone Network) or Internet. There are of course also a good number of shared lines available for external calls.
Now that you know what the PBX definition and meaning are, a hosted Private Branch Exchange is quite simply a version of this software that is located on a remote server in the cloud, which is most commonly a data center. It is essentially a switch that routes calls to the right phone.
Benefits of a Hosted VoIP PBX System
Some of the advantages of moving over to a hosted PBX telephone solution are listed as follows:
- This type of service can easily scale as your organization hires new employees and expands operations. You can upsize or downsize at will so long as you have enough bandwidth with your Internet service. Simple configuration on a secure web page is all that is required to add or subtract phone lines. Some providers will also do this for you on request.
- The features and functionality can be easily configured to change features or add user accounts by use of a basic web browser that accesses a secure configuration portal. You will have high end features available to you that used to only be available to large Corporations. Auto-attendant, voicemail to email, call forwarding, call hunt groups and many more are standard. Free long distance calls anywhere in the continental United States and Canada. No need for a separate fax connection, or even a fax machine.
- The actual PBX software typically runs on very high end data center servers so these solutions are extremely reliable. Most providers also have redundant architectures that limit downtime if a failure occurs with primary servers.
- Productivity improvements are almost guaranteed as users have access to a wide array of advanced features that are included as part of the price. Auto-attendants, hunt groups, outlook integration, Internet fax and even video calling are examples of some of these advanced features that are often available.
- Before Virtual PBX solutions became available, the only option for telecommunications entailed buying, managing and maintaining costly switching hardware which included the equipment, wiring, phones, installation and maintenance. One switch plus licensing can cost between $500 and $2,000 per user, which is an expensive proposition.
- There are no capital costs. The service is hosted in the cloud so no expensive equipment to be purchased, installed or maintained.
- Pay a low monthly fee for unlimited phone calls within the USA and Canada. Companies can save up to 80% on their phone bills compared to legacy analog PSTN based phone service. Payment can be made in two ways: (1) a monthly fee with unlimited free minutes for calls, or (2) metered plans that are based on usage. The low cost of the virtual solution does not translate into cheap, low-grade or third-rate service. A hosted VoIP service is highly efficient, feature-rich and is highly suitable for small and medium sized corporations. The system is streamlined and totally effective.
- Flexibility: Do you have some employees working from home, no problem. The extension dialed can be set to ring at home, on cell phones or at work.
Disadvantages of a Hosted PBX System
What about the disadvantages?
- A typical complaint with this type of solution is the voice quality, also known as the voice quality of service. In almost every case, the root cause of this issue is actually related to the Internet bandwidth available or its quality. If the voice service is setup correctly and available bandwidth is properly evaluated and it is reliable, this should never be an issue. Please refer to our in-depth article on how to properly setup a router for voip and you should be in good shape for voice quality. Confirm you have enough bandwidth in the first place with the WhichVoIP Speed test tool.
- If your Internet goes down then the hosted phone system is down. Not much can be done about this one and most companies that have mission critical voice systems typically have redundant connections to the Internet. So if one line goes down, the other one kicks in. In more typically applications both are always active and the traffic is being balanced across the two links to the Internet. In most cases, if your Internet goes down, getting it back up is the number one priority and the voice service can be pre-configured with back-up routes to try if the main route goes down. An example of this is sending 1-800 calls for head-quarters to a remote office while the network is down. Some companies may choose to keep a small number of analog phone lines (POTS type lines also referred to as Plain Old Telephone Service) as a back-up for Internet or power outages.
- If power goes out, the phones go out. Yes that is true but most mission critical applications are protected by backup power systems.
- IP Phones: These are very cool and have lots of functionality and lot of buttons to make life easy. The only problem is that there will be an upfront cost for any IP phone that you purchase (if not already owned). Another alternative is to run your existing phones with ATAs (Analog Telephony Adaptor's) connected to every phone, we highly recommend that you factor this cost in and make the switch to these newer digital phones. These phones can directly plug into your network via an Ethernet cable and as there is an embedded switch in the phone, it can also provide wired network connectivity to a PC.
How to Compare Hosted PBX Providers
Hosted PBX service has become very popular for companies of all sizes. If you are not quite at the stage where you need customized price quotes (i.e. see our quote form at the top of this page), it is worthwhile taking some time to visit each provider's website and see if it makes your shortlist. You can easily do this by clicking on the "more details" buttons in the table below. Here are a few reasons this approach is worthwhile:
- Some providers price in tiers depending on how many lines you need. Confirm the pricing for the number of lines that you need and check to see if you need to pay full price for every single extension, no matter how little it may be used.
- Evaluate the provider's website. If it is easy to find what you need and navigate then there is good chance the admin portal that you will use with your phones will also be easy to use.
- Check out international calling rates if you plan on making any international calls.
- There is really no such thing as "unlimited calling" and providers outline "reasonable" usage rates in their terms and conditions. Make sure you know what these are for the hosted pbx service you are considering. You can also use our feature comparison and price tools that we have developed for our visitors.
- Don't forget about user reviews as these are incredibily important to check out prior to making a decision. WhichVoIP is one of the leading sites for VoIP reviews with thousands of reviews for practically every service provider, so please check out either our residential reviews or business reviews.
Here is our current list of the best hosted VoIP PBX service providers for 2016.