VoIP System - Difference Between On-Premise PBX And Hosted PBX

What do you mean by VoIP?

VoIP stands for Voice over Internet Protocol, which distinctly refers to a VoIP-based phone system or a network paradigm that facilitates voice-based phone calls with the help of an internet connection rather than a local telephone service provider. Earlier in the 1980s, phone calls were made traditionally via the Public Switched Telephone Network (PSTN) created by using copper wiring and switches. The ingress of VoIP made it possible to conduct phone calls over the usual IP data networks that your computer, smartphones and tablets leverage for web browsing, video streaming and so on.

The working of a VoIP phone system?

First, VoIP converts your voice waves, that is an analog signal into a digital signal, then compresses it, and finally, transmits it over the internet. Then the VoIP service provider sets up the call between the two or multiple participants involved in the communication. At the destination node, the digital data is then uncompressed and converted into the analog signal, that is the sound wave that you get to hear through your headset or speakerphone.
VoIP System: Difference between On-Premise PBX and Hosted PBX
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There are some prerequisites for placing a call over VoIP, you require a SIP-compatible desk phone or a VoIP calling app so that it is authorized by assigning an IP address and allowed to make calls from the network and sustainable high-speed internet connection. In contrast to the obsolete landline phones, VoIP is capable of initiating high-definition (HD) phone calls. The high amount of data is stored in the cloud or the call can end-to-end encrypted, that is no record of the calls other than the duration and timestamp is maintained at the server, for instance, WhatsApp calls.
Advantages of using VoIP
  • The main reason behind the high popularity of VoIP is that it allows people to make phone calls without any telephone service, this enables them to cut down the long-distance expenses.
  • If you have internet access, you may escape the installation of additional copper wires. This is a boon for employees working remotely.
  • VoIP has substituted traditional phone service due to its high flexibility and additional calling features such as a group video call, that are available at a very pocket-friendly price.
  • The firmware requirements for VoIP are minimal and it has been frequently upgraded over the last few decades.

Major Differences between On-Premise PBX and Hosted PBX

When it comes to the initial set up and maintenance costs, Hosted PBX is more economical than On-Premise PBX, as it can be set up by just wiring a router and a modem and paying a fixed monthly charge to the service provider, depending on the minutes on-call or the features availed. Whereas On-Premise PBX requires a dedicated training of the IT employees, space for setting up the server, the entire range of hardware and software must be purchased, this can be grave for companies with a limited budget.
On-Premise PBX is highly flexible, as anytime your IT professional can add or remove any feature from your server, whereas, in Hosted PBX you are bound to select any plan from service providers range, any additional feature might be accompanied by heavy costs.
On-Premise PBX needs to be maintained and updated regularly by your firm, for that, you need to have a sustained and skilled IT as well as firmware management team, while in case of Hosted PBX the maintenance of the software and firmware is done by service providers, so you are free from that hassle.
If you are migrating your office, the entire On-Premise PBX set-up needs to be reconnected while in case of Hosted PBX, migration is quite elementary, you just need to send a request to your service provider and the rest is managed by them.
New devices can be added or removed abruptly in an On-Premise PBX whereas a Hosted PBX comes with some restrictions laid down by the service provider.
VoIP System: Difference between On-Premise PBX and Hosted PBX
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The final decision is on you!
The choice between On-Premise PBX and Hosted PBX depends on the business requirements, that is, the size of the firm, the domain of the firm, the initial budget of the firm, whether the employees can be trained for handling software, the configuration of the pre-existing infrastructure.
As we have distinctly presented the differences between On-Premise PBX and Hosted PBX, you can infer that, though the initial set-up cost, training costs and hardware requirements of On-Premise PBX are high, it proves to be cost-effective in the long run and offers a wide chain of customizable features. But if your firm is short on funds and your PBX requirements are limited to a few features, you may opt for Hosted PBX, this can be set up by just connecting a modem and a router and paying a monthly allowance to the service provider.
Both On-Premise PBX and Hosted PBX,have a few superior features, therefore a clear conclusion can't be drawn. Hence, the choice for PBX depends on the firm's requirements and resources.