hosted pbx

PBX, Hosted PBX and SIP Trunking: What’s the Difference?

Before Hosted PBX, There Was PBX

There were 41.6 million business Voice over Internet Protocol (VoIP) subscriptions in 2018. The business VoIP demand has been growing steadily since and is not showing any signs of slowing down. But before these modern technologies existed, the Public Branch Exchange (PBX) dominated the telecom scene. 

Per UC Today, “A PBX allows users to create their own telephone network within a company or organisation. With this system, employees can communicate internally for collaboration purposes and externally, with customers, shareholders and other contacts using channels like VoIP or ISDN. The PBX is a business telephone system first and foremost, evolving from the old-fashioned Key Telephone System, into a comprehensive tool for internal and external communication.”  

In short, a PBX system helps companies in managing their internal telephone network, including routing, outgoing and incoming call capabilities.

Let’s now briefly learn about more current solutions based on the internet.  

SIP Trunking and Hosted PBX are VoIP Services

Be it SIP trunking or hosted PBX, companies nowadays want the versatility of streaming data such as video on top of merely making voice calls.

As the internet matures, more firms see the benefits of using these VoIP services over traditional PBX and phone lines. But how do you choose between the two? Read on to find out what these VoIP services are and how they differ from each other.

SIP Trunking

SIP Protocol can help businesses communicate more reliably, but how does it work? First and foremost, SIP is an acronym for Session Initiation Protocol. The protocol enables the setting up, connection and disconnection of sessions (such as phone calls) between two or more parties. SIP is a well-known concept associated with IP telephony.

It is a virtual phone system that combines VoIP and other media streaming services. These data packets travel via SIP. 

With SIP trunking, your company can replace traditional phone lines using VoIP to transmit your voice as data on the internet. The protocol then goes a step further and combines this data with other media like video conferencing and screen sharing.

SIP trunking installs virtually in your organization’s internet connection. As a result, you no longer need physical phone lines.

Related: Wholesale VoIP Providers: The Key to Digitizing Your Communications

Hosted PBX

Per Techopedia, “Hosted private branch exchange (hosted PBX) is a telephone exchange system built, delivered, and managed by a third-party service provider. Hosted PBX is an IP-based telephony solution provisioned and accessed entirely through the internet.”

Because of its remote location, you do not need to own or operate a physical PBX box. The entire system runs on the cloud. Whenever you make or receive a call with a hosted PBX system, the call goes through your service provider’s servers before connecting to your phone.

In addition, a hosted PBX system will allow your company to avoid storing essential data in its data centers. Even though hosted PBXs have the same communications capabilities as on-premises VoIP phone systems or even legacy PBX, maintenance costs are almost nonexistent. 

Other names for hosted PBX include virtual PBX, cloud PBX, cloud phone system and hosted VoIP.

What are the Differences Between SIP Trunking, PBX and Hosted PBX?

Even after learning the basics, trying to decide between the traditional route or these two VoIP services for your company can be confusing. Since they offer similar features, it all boils down to your unique organizational communication needs and why you are looking to fulfill them. 

Here are the main ways in which PBX, Hosted PBX and SIP Trunking differ.


The amount a company will pay for infrastructure is crucial. You can expect the cost to be a significant factor in determining what phone set up you choose.

A hosted PBX service is cost-friendly as it is the provider who hosts and maintains the actual servers. All your organization will need to do is buy routers, IP phones and a business-grade internet subscription.

Using SIP trunking will also decrease your costs by using the internet instead of copper wires to replace your old PSTN service. SIP trunks require only one channel (corresponding to one concurrent call) instead of 23 channels on PRI lines. 

Regardless of their size, small and large businesses can easily increase or decrease their capacity requirements as needed. If you wish to maintain the current PBX equipment throughout your company, you can use an analog adapter or a “SIP-to-T1 gateway” to reduce telecom costs.

In stark contrast, PBX alone will cost significantly more. You will need to buy servers that will reside on-site, hire an IT team to maintain them and pay for the deployment. 

The nature and size of an organization’s operations ultimately determine whether the set-up costs of a VoIP service are justified or not.

Related: How to Select the Best SIP Trunking Provider


Every business requires a scalable infrastructure. Any business owner must be able to project growth and foresee future business communication needs.

Each traditional PBX can typically serve several hundred telephones. Therefore, when you need to expand the organization, you must invest some more into the system.

For example, you will need to buy on-site servers depending on the new number of phones you want to add to the system. You will also need to configure the necessary dial plans for every other phone you add. 

A hosted PBX solution, however, offers a slightly different scaling capability. To begin with, it provides unlimited capacity to add users. You can upgrade or downgrade it at will without needing deep IT expertise to do it.

To scale a remote PBX system, you only need a web browser, which means that even non-IT professionals can manage it. To add a new phone to the system, you just need to automatically register it with a VoIP service (IP phone booting). Then, you can enter the necessary information, and you are good to go.

The SIP trunking phone system, on the other hand, also offers the ability to scale. The technology helps eliminate scalability problems and increases physical infrastructure to host more users, all through a simple control panel.


Infrastructure maintenance costs will be a direct factor in determining your firm’s phone investment decisions.

With a traditional PBX, you will need to hire IT staff to maintain the system. Since the servers are located on your premises, you will be in charge of their maintenance. You can choose to go with internal or external maintenance staff, depending on what you prefer.

If any software updates to your PBX become available, your team or external consultants will have to handle the task. Your network manager will need to reinstall the software and reset the servers for the updates to take effect.

By its very definition, a remote PBX service means that you do not have to maintain any physical infrastructure. Your provider takes care of the software and server maintenance. Their dedicated staff will cover any upgrades or outages that crop up.

Maintaining SIP trunking is also very easy, as you do not need an IT background. All you need to do is take care of internal tasks like adding users, changing features and similar tasks to suit your needs.


As mentioned above, each organization has different needs and what will work best depends exclusively on those needs.

For your PBX service to work, all the phones will need to be on the same network. As a result, users of this system can only access the service if they are in close physical proximity. If your organization happens to have a branch, then it will need its own PBX before the service can start operating.

On the other hand, SIP trunking and hosted PBX utilities are online. Therefore, anyone in the firm can use the service from different locations and on different devices. Examples include employees who work at home or even while traveling.

All in all, internet-based VoIP phone services such as hosted PBX and SIP trunking have long provided versatility to business communications globally. Firms can now stream videos and screen share from just making basic voice calls, among other functionalities. 

SIPTRUNK’s expert resellers will assist you in considering your business’ size and purpose and help you decide the best SIP trunking solution for you. Get started now.