Hosted PBX with Cisco 504G IP Phone

Hosted PBX: Advantages and Disadvantages

If you are unfamiliar with the term take a few moments to read about Hosted PBX and how it differs from a traditional telephone system. Once you have a general understanding of how hosted PBX is different, then continue reading to learn about the advantages and disadvantages.

Cisco 504G IP Telephone for Hosted PBXAdvantages of Hosted PBX

There are many advantages to implementing a hosted PBX solution.  These advantages can be financial, logistical and based on the staff of the organization.

Financial Advantages

  • No Up Front Capital Expenditures
  • Future proof with software upgrades
  • Only pay for what you need
  • Monthly rate includes hardware and service

With most hosted providers there are no capital expenditures for the telephone and networking hardware utilized for hosted PBX.  There may be minimal setup and programming costs, but will be a fraction of what a traditional PBX would cost to install.  Once the service is provisioned, you simply pay a monthly recurring charge for the services and features that you receive.

1 User = 1 SeatLogistics

  • Pay for what you need
  • Multi-Location, Remote Worker Capability
  • Deploy quickly and easily, without headaches
  • Grow one seat at a time

A hosted PBX solution provides logistical benefits that are hard to find with any other type of installation. With hosted, you can grow one seat at a time.  This allows you to pay only for the services that you need. Hosted seats are quickly and easily deployed, making the initial install and future growth less painful. Because hosted PBX seats are connected via the IP network, it doesn’t matter where they are located.  If you open an office in a different location, simply add hosted telephone sets there and they become a part of your existing system.  Have a remote or teleworking employees?  You can extend the features and functionality of the office to those users by installing a seat at their home office.  New users can be deployed in hours instead of days.

Internal Staff

  • No need for dedicated telecom personnel
  • Simplified moves, adds and changes
  • Remote programming by provider

Because your telephone system and its features are hosted in the cloud, there is no need for on-site management.  Moves, adds and changes can typically be administered remotely, without the need to even roll a service provider’s truck.  This can cut your internal costs for telecom management personnel and reduce your total cost of ownership in the long term.

With all of the benefits of hosted PBX, you may be asking yourself; “what’s the catch? Why wouldn’t everyone make the move to hosted PBX?” There are a few disadvantages to this type of service, and they may be enough to sway your decision.

Disadvantages of Hosted PBX

  • Quality Broadband Required
  • Network Limitations
  • Monthly Charges Tipping Point

 Broadband Required

Access to all cloud-based services is dependent upon your ability to access the internet. Hosted PBX is no different.  However, the quality and stability of your broadband circuit is far more critical when you plan to layer on your businesses voice traffic. Quality of service hardware can be put in place, but ultimately the reliability of the connection will determine the quality of your experience with hosted voice services. While it is possible to layer voice onto DSL and cable modem circuits, we recommend broadband connectivity with higher service level agreements, such as T1, fiber and ethernet where available.

Existing Network Limitations

This is not a great disadvantage, but could be costly depending upon the state of your current network.  Since hosted PBX is IP-based, you will need a data network that is up to the challenge.  This means at a minimum Category 5 cabling and a switch to handle multiple phones.  If you want to separate your voice and data traffic for quality purposes, you will also need a router capable of segmenting these services.  In addition, you may want to consider power over ethernet (PoE), to power the phones if you don’t currently have this capability.  All of this additional hardware may be included in the hosted PBX solution, if it is not currently in place.

More Users, Higher MRC

At a certain number of users, hosted PBX may become less cost effective than a premise-based PBX.  That level will vary from business to business.  We have found that businesses between two and twenty users are typically good candidates for hosted PBX services, depending upon their communications needs and what solution they currently have in place.  Because this type of service is paid for by each user seat or add on, the monthly recurring charge (MRC) will increase with the number of users.


Hosted PBX offers many advantages to small and medium sized businesses.  The benefits are even greater if your existing equipment is aging and it may be time for an upgrade.  The minimal up-front costs, low ongoing maintenance and ease of deployment and growth make it a great solution for starting from scratch or upgrading an existing system.  If your existing network can handle the implementation and you feel the monthly costs aren’t over the break point for your communications budget, hosted PBX may be an excellent choice for your organization.