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What is Cloud Hosted PBX?

This article by Robert Pepper was originally posted on

Every business VoIP provider advertises Cloud Hosted PBX, virtual PBX, IP PBX, Cloud PBX, Hosted PBX, or some variation on those words to mean the same service. But what does that jumble of words and letters actually mean?

In the pre-Internet days, a business or a large institution would have a PBX, or “Private Branch Exchange.” This was essentially a private network, each with its own extension. This network was independent from the PSTN. You may remember having to dial “9” to get an outside number? That was a private network. At the time, having your own telephone exchange was a sound business decision. For regular phone users, you would pay by the minute because you were really “renting” time from the phone company to use their network. Within a private branch, once the infrastructure was set up, every call within the network was free.

Voice over IP changed everything. Instead of using telephone infrastructure, it uses the internet as its infrastructure. The scale of the internet is so large that costs drop dramatically. You move from needing dedicated voice lines to using the same data cables that you connect to your computer. Your phone, your computer, and a smartphone running a VoIP app connect to the same PBX.

But if there’s no internal network, where do all the calls come from? A “hosted” PBX means that your VoIP provider has its own servers doing the number-crunching necessary to encode, transmit, and decode all that data. It’s all done offsite – off your site. The VoIP provider maintains all those servers, and has its own facility, its own IT workers, and everything necessary to keep everything running smoothly. And because of the economy of scale,  there is so much bandwidth available that hosted PBX providers can offer dozens of free calling features. This is how a company with a dozen employees can compete with a company that’s been in business since 1877!

So how does all this take place in the cloud? Instead of one monolithic building, warehousing dozens of servers, the work is spread out across servers all around the world. This is known as virtual hosting, or cloud hosting, because there is no “real world” place for all this data. It’s constantly being moved across the internet.

The biggest advantage of PBX hosting and Cloud PBX hosting is how easy it is to move forward. As technology progresses, you’ll already have access to it. As your company grows bigger, there’s no need for a big upgrade, you can make small adjustments to the level of service as you need it. There is no doubt that the future of business is the internet.

Click here to read the original article.

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