Cloud PBX or Hosted PBX, otherwise known as a Cloud-based phone system, is where the provider houses the IP PBX in their data center as well as handles the technology required to provide the services to the phone system. The desk sets connect to the internet network at the customer’s site and the call, signaling, and features are handled through an IP PBX server at the provider’s location.
The provider of the Cloud PBX charges a monthly fee for the service intead of an up-front capital expense with on-premises system. There are both unlimited and metered minute plans to suit all types of companies. A company that knows the amount of minutes spent on the phone in a given month can make effective cost comparisons. Extended features may come with additional costs.
The On-premises PBX is also known as an IP PBX phone system. It is similar to a traditional PBX system that resides at a location, such as a computer equipment room or phone closet. The main difference is that IP routing is done with the latest technology. The signaling is done with an IP phone to the IP PBX server using a LAN. Calls can go through a traditional phone company as well as voice over internet (VoIP) using SIP trunking. Gateways or telephony cards are used to connect the system to the traditional phone company provider.
The provider can be the one that already provides the service, though a SIP Trunk can be configured to use with an internet service telephone provider (ISTP). An Asterisk-based system can be one of the most affordable options for an on-premises PBX due to the flexibility that is offered with open source software.