hosted pbx

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

Chances are that if you’re reading this, you aren’t up to date on the latest telecommunications innovations. That means you, like many people, may need some help understanding the different terminology. While telecommunications terms aren’t something everyone needs to be familiar with, it is beneficial for business owners who want the latest tools and enterprise-grade features, and it’s also vital for resellers who want to offer the most cutting-edge technology to their customers. 

How many channels might a business need? Will your clients be looking for more than just voice? How much are they willing to invest in infrastructure? There are not only distinct differences between PBX, hosted PBX, and SIP trunking, but there are significant impacts of each that should be carefully considered before deciding on the best communications solution for your clients.

Before Hosted PBX, There Was PBX

While it is hard to imagine a time before virtually every business and household had internet service and VoIP calling, there were many years of plain old telephone service (POTS) prior to these newer technologies becoming the norm. For homes, that was a landline. For businesses, it was the Public Branch Exchange (PBX).

A PBX system is an on-premises solution that allows companies to create their own internal telephone network. Though it evolved from the old POTS system, today there are solutions that allow communications to work with VoIP and circuit-switched telephone network systems, such as the Integrated Services Digital Network (ISDN). In short, a PBX system helps companies manage their internal telephone network, including routing, outgoing, and incoming call capabilities. While that may sound good, it requires expensive infrastructure, hardware, and ongoing maintenance from knowledgeable internal staff. 

SIP Trunking and Hosted PBX Are VoIP Services

When it comes to communications, companies today overwhelmingly seek versatility and convenience without a significant upfront investment. They also want the benefits that come with VoIP services on top of merely making voice calls. That’s where SIP trunking and hosted PBX come in. 

SIP Trunking

Session Initiation Protocol (SIP) can help businesses communicate more reliably, but how does it work? SIP is a set of rules that enables the setup, 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 that use SIP to send and receive data packets. 

Related: Why Businesses are Flocking to this Game-Changing Communication Solution

With SIP trunking, your company can replace traditional phone lines using VoIP to transmit voice as data over 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 through an organization’s internet connection. As a result of no longer needing physical phone lines, businesses don’t need to be tied to a single physical location either.

Hosted PBX

Now you know that traditional PBX systems are internally owned and maintained. So, how does hosted PBX work? Think of it as a telephony catering service: instead of slaving over a hot stove (infrastructure) to create a dinner (business communications service) for family and friends, you simply call the caterer (third-party hosted PBX provider) to do it all for you. All you have to do is pay a fee and reap the benefits. No muss, no fuss.

A cloud-hosted PBX (also called virtual PBX, cloud PBX, cloud phone system, or hosted VoIP)  lets you provision your communications platform through the internet. Businesses don’t have to invest in PBX hardware. They also don’t have to store the data internally in a data center. They can get all the functionality of a traditional PBX or on-premises VoIP phone system without the financial overhead of hardware, storage, and maintenance.

What Are the Differences Between Modern Telephony Solutions?

Now that you understand what each solution is, it’s time to compare and contrast the differences so that you can fully understand the benefits of this technology and how to help your clients make an informed decision. Let’s dive into the primary defining characteristics that separate PBX, hosted PBX, and SIP trunking.


The amount a company will pay for infrastructure is a crucial factor in determining what phone setup they choose. First, let’s consider the cost of the legacy PBX system. It comes with significant investment:

  • servers that become permanent on-site residents 
  • skilled IT team to maintain the servers
  • deployment expenses

It’s an upfront financial outlay that many companies would rather avoid.

On the other hand, hosted PBX is a budget-friendly choice. The provider hosts and maintains the servers, and all an organization needs to do is purchase routers, IP phones, and a business-grade internet subscription. This not only streamlines operations but allows companies to save money for reinvestment in other areas.

Now, let’s talk SIP trunking. This solution reduces costs by utilizing the internet instead of traditional copper wires, removing the expense and time involved in getting phone lines installed. Since SIP trunks require only one channel, as opposed to the 23 channels required for PRI lines, businesses can flexibly adjust their capacity without worrying about additional expenses. If a company has legacy PBX equipment, SIP trunking lets them reduce telecom costs with analog adapters or a “SIP-to-T1 gateway.”


Every business can benefit from a scalable infrastructure. Any business owner must be able to project growth and foresee future business communication needs. Traditional PBX systems come with considerable limitations regarding scalability. As a business expands, it will face the need for on-site servers and servicing additional phones. While possible, scaling with the traditional PBX system is not quick, easy, or cost-effective.

Hosted PBX offers more flexible scalability. It opens up unlimited capacity to add users, allowing a business to upgrade or downgrade at will. There is no need for deep IT expertise. Instead, they simply register with a VoIP service (IP phone booting), and they’re up and running. A cloud-hosted virtual PBX provider will have a browser-based administration portal that makes adding or removing users quick and easy.


In the fast-paced business world, reliability is critical. While legacy PBX is not dependent on whether or not the internet service is working, it lacks the other fast failover, disaster recovery, and business continuity options of SIP trunking and hosted PBX.

A virtual PBX resides in the cloud, bringing a new level of reliability and flexibility. Cloud hosting helps with business continuity and disaster recovery after unforeseen circumstances cause disruptions. Since this solution relies on the provider’s platform and network, you benefit from the additional redundancy, security, and data backup. The provider takes care of data protection and compliance, ensuring your customers’ communication systems are secure and highly resilient.

SIP trunking ensures the seamless flow of data packets. Video conferencing, screen sharing, file sharing, and a host of other collaboration tools offer seamless options when conditions make it necessary to quickly change locations or work remotely. The right provider will ensure you benefit from a tier-1 redundant network and fault-tolerant DID routing to keep your clients’ businesses communicating reliably.


Another often overlooked cost of communications systems is the ongoing expense of maintenance. With a traditional PBX, a company might need to hire IT staff to maintain and upgrade the system regularly. Since the servers are located on the premises, their internal team is responsible for the system’s health and stability. Of course, they also have the option of hiring an external maintenance staff, but in the end, they are ultimately responsible.

By definition, a remote PBX service means that your clients don’t have to maintain any physical infrastructure. Your SIP trunk provider takes care of the software and server maintenance, with dedicated staff to cover any upgrades or outages that crop up. This makes maintenance easy for you and a huge benefit to your clients. All you need to do is manage simple internal tasks like adding users, changing features, and similar administrative tasks as a business needs change.

Related: The Future of Telecommunications: The Rise and Impact of SIP Trunking in Business Communication


Mobility is increasingly critical for today’s businesses. Traditional PBX comes up short in this category. Businesses are tied to the physical location where their infrastructure is installed, and users can only access the service if they are in close physical proximity. 

Both SIP trunking and hosted PBX provide ultimate mobility. Since they are online technologies, anyone in the organization can use the service from different locations and on different devices. Regardless of physical location, the team stays seamlessly connected to the communication hub—virtually. 

Modernize Your Clients’ Business Communications with Hosted PBX and SIP Trunking

When comparing cost-effectiveness, scalability, reliability, and mobility, a clear picture of the need for modern business communication emerges. While traditional PBX may have been the ultimate solution at one time, it’s clear that hosted PBX and SIP trunking are now the more efficient, flexible, and budget-wise solutions. The choice is not just about communication. It’s about future-proofing businesses for whatever lies ahead. As a reseller, everything comes down to choosing your provider wisely so that you can offer your customers the best solution to meet their needs.Internet-based VoIP phone services, such as hosted PBX and SIP trunking, provide versatility to business communications globally. If you haven’t jumped on board yet, the time is now. If you’re looking for a top-tier provider so that you can offer your customers the best in advanced business communications, look no further than SIPTRUNK. Get started now.