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Thomas Han

February 24, 2017

Hosted PBX vs SIP Trunking - What’s the Difference?

Learn about the differences between a hosted PBX system versus SIP trunking, and which option is a better fit for your business requirements.

Hosted PBX and SIP Trunking are both modern-day digital-equivalent of the outmoded Plain Old Telephone Service (POTS) that delivers VoIP services for business users. Enterprise users are streamlining communications and leveraging significant cost savings and capabilities offered by the internet. Advances in technology and cloud computing make it a natural progression.

Organizations that do not make the switch to modern communications technology are failing to take advantage of the opportunity to convert what is commonly a cost center into what can become a profit center. The two business telephony options most companies are very likely to consider are Hosted PBX and SIP Trunking.

With Telzio, both the hosted PBXSIP trunking and are provided in a single solution.

The question we want to help answer here is whether or not a company would want to source their own SIP trunking services.

How the PBX Deployment Differs

At the heart of all business telephony systems is the PBX or Private Branch Exchange. A PBX is the switchboard that connects callers to the desired internal extension and enables the enterprise to stream all external communications (inbound as well as outbound) across the internet.

That includes voice, audio, data, faxes, video, text, and the PBX uses Network Convergence to combine audio, video, and data into a single network. The technology enables users to communicate externally with phones and mobile devices around the world using internet-enabled service.

The difference between Hosted PBX and SIP Trunking is in the deployment of the PBX itself.

What is SIP Trunking?

SIP trunking is the method by which your business is connected to the public telephone network (PSTN) via an internet connection rather than traditional phone line systems.

For SIP Trunking, the PBX equipment is situated on-premise, and it is managed by your company’s own IT staff. The organization purchases and maintains the equipment and carries out all configuration, upgrades, security, and general management as an IT function. The PBX establishes a direct internet connection with an Internet Telephony Service Provider (ITSP) and can connect with multiple ITSPs to take advantage of unified communication services. What SIP Trunking essentially does, is that it carries over your phone data onto the internet, and can automatically connect to another SIP user, a traditional telephone line, or a VoIP user.

Benefits of SIP Trunking

There are a number of benefits that come with using SIP Trunking in your company’s telecommunications system. We have listed three key benefits of SIP Trunking below.

SIP Trunking Eliminates PRIs

In general, SIP trunking is more scalable and flexible in comparison to other telephone systems. One thing that is great about SIP Trunking is that your business will no longer need PRIs (Primary Rate Interfaces), and will not need to purchase additional subscriptions fees since the SIP trunk is directly connected to the specific internet telephone service provider. This effectively decreases your company costs.

SIP Trunking Assists Company Growth

If your company is looking to expand, then SIP trunking is definitely a great way to avoid the need to purchase additional physical features, such as multiple phone lines. Since SIP Trunking uses your VoIP system to connect your PBX system to the internet, your company will be able to consolidate all of its expenses in relation to operations in one single IP-based network. Once again, your company will be taking advantage of a tremendous cost saving opportunity, which comes in especially handy in times of company growth and expansion.

SIP Trunking Creates a System of Unified Communication

One of the greatest benefits of SIP Trunking is that your company will be able to create a system of unified communication, that can integrate all of your company’s cloud-based systems into one unified platform, including instant messaging, data, and voice.

Learn more about Telzio's one stop solution for SIP Trunking and Hosted PBX.

What is Hosted PBX?

A Hosted PBX (private branch exchange) system is a telecommunications exchange system that is delivered as a hosted service. A Hosted PBX will be owned by an ITSP, deployed in the cloud, and provided ‘as a Service’ offering with a range of VoIP functionality.

With Telzio, companies pay a subscription depending on the volume of usageper user they choose, and all functionality and users are included. With other ITSPs, companies pay a subscription depending on the mix of services they choose in addition to a subscription fee .

Incoming calls to the cloud PBX are forwarded instantly to your in-house system. Setting up services is fast, does not require IT skills, and has a very low initial cost of ownership. You get an internet gateway to configure all your services and start calling in no time. There are no ongoing maintenance costs for things like system upgrades when it comes to using a hosted PBX service like Telzio.

Benefits of Hosted PBX

Moving your phone system to the cloud is a great solution, especially for small sized businesses. There are a number of benefits that come with using a hosted PBX system for your company’s telecommunications system. We have listed three key benefits of Hosted PBX below.

Hosted PBX Helps Save on Installation Costs

With a Hosted PBX system, your company will make tremendous savings by eliminating installation, maintenance and operation costs altogether. This is because when your company has a hosted PBX system, its VoIP service provider is in charge of hosting the company’s PBX system. This includes being in charge of call switching, call routing, and all call maintenance that is involved with the Hosted PBX service. Through a Hosted PBX system, your company will only have to worry about controlling and handling its own automation processes, faxing, voicemail, and phone conferences. Say goodbye to expensive phone installation costs, as well as pricey phone maintenance costs, as your PBX system will be operated out-of-house, by your third-party vendor.

Hosted PBX is Outsource Maintained

As mentioned previously, with a Hosted PBX system, your company will only have to worry about controlling and handling its own automation processes, faxing, voicemail, and phone conferences. This can help to save your company both time and money, in regards to installation costs, together with operation costs and maintenance costs. This will effectively grant your business more time to focus on factors such as company growth and expansion.

Hosted PBX Grants Great Flexibility and Reliability

Hosted PBX systems are especially flexible and reliable when it comes to making calls, receiving calls, and transferring employees to and from calls respectively. With a Hosted PBX system, you will be able to access phone calls easily, and from anywhere. In conjunction with your company’s VoIP provider, your Hosted PBX system makes it quick and easy to connect a particular telephone line to your IP phone, a home phone, or even a laptop. All you have to do is make sure that your company has the appropriate software installed in order to make this a reality.

Related: What is a PBX?

Hosted PBX Features

Hosted PBX comes with a number of great features that your company can benefit from tremendously, and really convert what is commonly a cost center into what can become a true profit center. With Telzio, you can use mobile phones, desk phones, and even your browser to make calls. With a cloud phone system from Telzio, all company locations and users are centralized on one unified platform. Some of the features that our Cloud PBX systems have are listed below.

See more hosted PBX features.

What Is The Best Option For Your Business?

When it comes to deciding whether your company will benefit more from a SIP Trunking system or a Hosted PBX system, you will need to consider several factors, as every enterprise has different priorities and requirements.

Usage Requirements and Cost Optimization

Small and Midsize Business (SMB) organizations that experience consistent and straightforward communication requirements don’t have to invest in expensive PBX systems. The cost of deployment, management, and maintenance of the SIP Trunking service generally outweighs its value propositions for small businesses with limited VoIP requirements and inadequate IT staff on-premise.

Unless your organization is expanding rapidly and falls in the enterprise category, the Hosted PBX model will offer significant financial benefits in terms of cost variability. SMBs can trade high CapEx on SIP trunking equipment with affordable OpEx on a hosted PBX option while leveraging the same high standards of VoIP communication capabilities.

On the other hand, SIP trunking may better suit large-scale enterprises that already own PBX systems and can leverage those previous investments to establish SIP trunking on-site.


SIP Trunking puts the configuration of the PBX under your control to take advantage of whatever advanced features are of benefit to your business. With SIP trunking, you can also choose from multiple ITSPs to benefit from features such as lower call rates for business-hour usage.

ITSPs compete on the range of functionality that they offer. Therefore, the flexibility to change providers can be a significant attraction.

However, failure to research and plan for the best available options may be damaging in the long run if organizations are not able to maximize the value potential of their VoIP investments or add desired functionality as needed.

The hosted PBX deployment offers a viable alternative in this regard. Organizations dissatisfied with existing service and looking to provision resources on the whim are best served with the hosted PBX model. It’s important to make sure with any provider, that the necessary agreements are in place to prevent vendor lock-in.


Control of any on-premise network infrastructure will be subject to your own security policy, ensuring that your defined standards are met and constantly maintained. SIP trunking offers this advantage by default. However, this also means the organization itself is responsible to ensure compliance and end-user security in the event of a cybersecurity incident or network downtime.

With the Hosted PBX deployment model, the solution provider is in charge of maintaining a compliant and secure environment of the highest standards. SMBs operating on a limited budget cannot afford to replicate similar high standards of security for self-managed SIP trunking VoIP services.

For an organization to establish similar high levels of availability with SIP trunking, a dedicated infrastructure comprising of several redundant components and backup systems will be required to reduce the costly risks of service downtime.

Learn more about Telzio's proprietary VoIP system and commitment to security.

Long-Term Thinking

It pays to take the time and effort to investigate both options. A long-term cost-benefit analysis is required to ensure well-informed decisions from a technical, financial, and logistics perspective. For organizations already using an in-house PBX, SIP trunking can expand the functionality of their existing system to enable enterprise-wide VoIP functionality. On the other hand, others can invest in hosted PBX solutions and leverage a high standard of VoIP and unified communication services immediately.

Schedule a demo to learn more about Telzio.