All telecommunications are not the same and the differences between VoIP and hosted PBX can mean big changes for your company. You should know how each system works and what they do best to make the right decision on which to use for your business.
What is VoIP?
VoIP (Voice over Internet Protocol) is using the Internet to transmit audio phone conversations, among other aspects of a phone system. Instead of having a traditional phone line where you send and receive calls, you are using the internet to do the transmissions.
This type of system has been around longer than most think. VoIP was first used in 1995 as a way to circumvent long-distance telephone charges and to call globally easily without incurring international telephone or cellular roaming rates. Yes, people once had to pay to call long-distance and internationally with peak hours – during the business day – being the most expensive time to call. Anyone older than 50 can probably remember waiting until after 8 p.m. to call a long-distance friend or relative because rates were cheapest then. VoIP changed all that, making doing business across the country and the world more convenient and affordable.
VoIP works by breaking down audio into bits and sending packets of bits across the internet. The packets are reassembled at the end-user so they hear the audio the same as any other type of phone system. One difference is the packets are encrypted so they can’t be deciphered during transmission, making VoIP a secure way to talk and transmit messages.
The past 30 years have seen the growth of VoIP with more people trusting it for every part of their telecommunications. VoIP is no longer an alternative way to communicate but is a mainstay of business communication. VoIP has all the features of traditional phone systems with switchboards, call forwarding, and voice mail but it offers much more.
VoIP can do things like transcribe a phone call into text and send it to your email, record all phone conversations for easy reference, monitor time spent on each call, and give a local phone number in a new area set for expansion. It can be used by employees on the road to call clients with their personal number masked behind the corporate number and new lines can be added or deleted quickly.
What Is Hosted PBX?
A Hosted PBX (Private Branch Exchange) is a phone system without hardware at the business. Hosted PBX stores all your telephony in the cloud and is managed by a third-party provider. It uses VoIP so all calls are made over the internet but the third-party management company provides the infrastructure and support from the cloud.
The advantages are that costs are reduced as hardware isn’t needed. Phone systems can be upgraded easily as a company grows and a Hosted PBX system comes with a ton of advanced features.
There are also on-site PBX systems and understanding the two is important. On-site PBX systems require the company to buy and maintain telephone hardware in its local area connection. That means a business will need IT professionals and others to ensure phone lines and all their features continue working.
Hosted PBX requires no hardware and your hosted provider maintains all of your telephone infrastructure. That reduces employee cost and hassle of maintaining your communications yourself.
The Connection of VoIP and Hosted PBX
Business owners can operate with either VoIP alone or through Hosted PBX. The primary difference between the two is that VoIP can operate independently of Hosted PBX. Hosted PBX, however, requires VoIP to handle calls.
The primary concern should be how much telecommunications hardware do you want on-site and how much control do you want over it?
Security should be another concern. With Hosted PBX, your data information is stored on your host’s servers in a data center. The data center can be anywhere and should be under tight security.
Which is Better for Small Business?
A definitive answer doesn’t exist of whether VoIP alone or with a Hosted PBX is better for small business. It depends on the business, plans for growth and expansion, and how much control is needed over telecommunications data.
Businesses that feel the need for extreme high security of their or clients’ information may be best served by keeping an on-site PBX system with VoIP. This could be law firms, innovative tech companies, doctor’s offices and research companies, among others.
Companies that feel comfortable with the security of their chosen Hosted PBX system and don’t want or can’t invest in on-site hardware should go that route. Most Hosted PBX systems are secure and will share where their servers are and security protocols for the data center housing them.
Overall, VoIP will save a small business money and hassle even if you use it independently of a Hosted PBX system. You can usually use your old hardware for VoIP so the change doesn’t feel that different to employees. Yet, the advantages of using the Internet for communications are many. It is more reliable and cheaper than a traditional telephony system. It won’t go down during an emergency as there are backup plans in place and it easily maintains and tracks phone calls for monitoring and data analyzation.
