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Cloud PBX vs. Premise-Based PBX

By: Scott Resnick


Cloud PBX

It can be difficult to choose between premise-based PBX and cloud PBX systems. When making this decision, you should consider which phone system works the most efficiently at the most reasonable cost for your budget and needs. Let’s discuss the differences between premise-based PBX and cloud PBX systems.

What is a Cloud PBX?

Often called an internet phone system, a cloud PBX provider controls both the system and the technology necessary for the phone system. In this system, your provider’s server will route your calls and features to your location. Most of the time, cloud PBX providers charge monthly fees that include minutes and special features.

What is a Premise-Based PBX?

In contrast to the cloud-based PBX, the premise-based PBX is set up at your location. In this case, calls are routed through the phone, as well as through the internet using SIP trunking. That means that the system can be used with a telephone provider or through an internet service provider.


A hosted PBX requires purchasing IP-enabled phones. Additionally, you may need to buy a specific router and network switch. These limited requirements mean that the hosted PBX has lower equipment and setup costs.

The premise-based PBX, in contrast, requires you to purchase a server and interface cards that let you connect the telephone company and the OP phones. While the setup cost of the premise-based PBX system is higher, premise-based services usually offer lower monthly costs. However, keep in mind that server maintenance will fall onto your shoulders with the premise-based service; in contrast, with cloud PBX providers they will upgrade servers, routers, and other system hardware.


A cloud PBX system makes it much simpler to add new features to your phone.  The provider, instead of the user, installs new features. Additionally, a cloud PBX is simple to move from one location to another, and any sudden loss of internet connection at your business won’t affect the function of the phone system.

In contrast, the premise-based PBX also has its own set of benefits. For one, you have more control to add and delete users as needed. You also don’t have to change your current carrier, and over time, ownership of the server does save you money. Additionally, with SIP, trunking calls can be sent to another phone or mobile phone if your internet goes down.


If you need to grow your business and phone system, premise-based PBX makes expansion easier. You simply need to purchase more phones and add them to your system. In contrast cloud PBX systems require you to add more phones to your service plan and program these phones, upping your monthly cost.

Choosing Your Service

Both premise-based PBX and cloud PBX systems have their positive and negative features—your choice depends on which system fits your business best. If you’re still not sure which system fits your needs, we can provide a more detailed analysis about which system will work best for your company. TTI (Today’s Telecommunication Industries, LLC) Houston can help you decide whether a premise-based PBX or a cloud PBX is right for your business.

Published: January 13, 2017

Source: TTI Houston

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Scott Resnick

Scott Resnick is the President and Owner of Today's Telecommunications Industries, LLC (TTI) in Houston, TX. For the past 39 years, Scott has been instrumental in serving the telecommunications needs of some of Houston's largest and most influential companies. TTI is one of the largest NEC dealers in the United States. Scott is an avid baseball fan, loving father, husband, and a world traveler.

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