PBX Market Continues to Shift

Jul 2017

At the heart of every business phone system is the PBX – the centralized switch which integrates internal phone extensions with outside phone lines and allows calls to be set up, routed, and transferred.  For many years, PBXs were big physical machines.  At first they were switchboards with human operators, and then later they became automated and installed on-site at a company.  Today most businesses have a PBX installed in a dark closet somewhere on site.  But this is changing.

PBX Installed in a Dark Closet

Old Telecom Closet

A Shifting Market

Over the past decade there has been a rapid move towards a new type of PBX, the cloud PBX (aka “virtual PBX”, “hosted PBX” or “UCaaS”), where the essential components of the business phone system are hosted in the cloud and the operating business accesses the system over some type of internet connection.  Companies still may get new desktop phone sets, but instead of registering to an on-site PBX in a dark IT closet on premise, the phone sets register to the cloud service providers phone switches off-site.  A recent study by Software Advice found that over 57% of companies where seeking to switch to a cloud business phone system.   Nemertes found that whereas in the past security concerns were preventing companies from adopting cloud PBXs, now many IT managers view third party cloud offerings as more secure than on-premise offerings, further accelerating the shift towards cloud business telephony.

Some Key Differences

So what is driving this shift?  Many factors.  There is a growing sense of comfort with cloud technologies in general.  Dispersed workforces and remote employees are demanding better mobility offerings.  Companies are shying away from Cap Ex projects, owning fewer IT assets, and shifting more spend to outsourced service providers.  Increasing numbers of millennial workers are causing companies to make sure that their business communications infrastructure incorporates all of the necessary bells and whistles like video calling, web meetings, persistent workspaces, chat and presence – things the on-site PBX was never designed to deliver.  But even if all you are looking for is a basic business phone system, there still are some key differences you should be aware of when comparing a traditional on-site PBX to a newer Cloud PBX offering:

On-Site PBX Cloud PBX
Cost A company usually purchases the phone switch, desktop phones, and all associated licenses and pays for a telecom technician to install and configure the system.   These costs vary dramatically based on brand of system, complexity, and feature set. Cloud business phone systems are sold as a service and have recurring monthly charges.  They will almost always have lower initial costs than an on-site PBX.   Depending on the maintenance and upgrade costs of the on-site option and the feature set, the ongoing monthly costs of a cloud phone system might be higher.
Maintenance The on-site PBX requires either a knowledgeable IT manager or third-party technician to add, remove and change phone extensions and perform periodic maintenance.  All updates / upgrades usually involve the purchase of new hardware and licensing. The cloud business phone system is maintained off-site by the service provider and included as part of the service.  Configuration changes can usually be made remotely or self-service by either the service provider or the business customer.
Features The feature set of the on-site PBX has expanded through time, and is determined by the level of licensing purchased by the end customer.  Many PBXs now support some type of desktop soft phone or mobility feature. The cloud service providers are at a distinct advantage when it comes to advanced features like mobility, because of the way they can seamlessly reroute traffic across different networks and devices.
Flexibility The number of users an on-site PBX can accommodate is based on the number of ports and licenses acquired at time of purchased.  More users or remote offices can be added in the future, provided that additional hardware and licenses are purchased.  Companies generally do not decrease or shrink their PBX over time. You can usually add or remove users in increments of one, and also tie in or decommission specific sites or locations over time.  Depending on contractual terms, you may be able to increase or decrease the number and types of features as well.
Carrier Costs Most businesses today pay or a bundle of phone lines from a local telephone company in the form of analog lines or PRIs.  These costs are in addition to the costs of the on-site PBX hardware and licensing. Businesses usually eliminate their local phone carrier and all associated POTS or PRIs.  Instead of traditional phone lines companies run their call traffic over the internet (dedicated or shared) and usually eliminate local and long-distance usage charges.


As is the case with most IT decisions, the devil is in the details and it is important that you make sure the system you select is well adapted to meet the ever-changing needs of your business.  But if you aren’t at least considering cloud PBX as an alternative to the on-premise PBX, then the likelihood is that you haven’t looked hard enough at the relevant tradeoffs.

About Altus

Altus is the premier choice for cloud-based business communications, providing companies with flexible and secure technologies that help employees and customers stay connected more easily.  Whether looking for basic voice service, comprehensive unified communications, or contact center, business executives trust Altus to deliver the latest features and functionality without costly capital spending programs.  As an FCC-registered service provider, Altus offers enterprise-grade performance across its secure, geo-redundant carrier platform. Start communicating better with Altus.  For more information, visit www.altusuc.com or call toll free 866.922.4001.

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