What Is A Hosted PBX? A Guide To Cloud VoIP

If you're reviewing your telecoms and considering switching to VoIP, it's more than likely that you'll opt for a hosted PBX, but what exactly are they? How do they work? And who are the best providers? This guide looks at all of those questions and more, telling you everything there is to know about hosted PBX services.

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PBX stands for Private Branch Exchange, which is a private phone system used in a company or organisation. The users of the PBX can use the system to communicate both internally and externally via VoIP, ISDN or analogue. Having a PBX lets you have more phones than physical lines and allows free calls between users. Also, a PBX will usually give you additional features such as voicemail, call recording, call queuing, amongst others.

hosted PBX phone system

What is an IP PBX?

An IP PBX is a telephone system that uses IP (internet protocol) to carry calls over computer networks rather than PSTN (the regular phone network) or ISDN. So handsets are plugged into your existing RJ45 network sockets, with calls being carried over your ethernet network. IP PBXs can be hosted in various places, but the two primary options businesses consider, on your site or in the cloud. 

What is an on-premise PBX?

An on-premise PBX, also known as an IP phone system, is similar to a traditional phone system in that it resides on a business' site, usually in a communications cupboard or cabinet. Similarly to a hosted solution, you need IP handsets, mobile phones or computers to make calls, but rather than the call management in the cloud, it happens locally.

What is a cloud-hosted PBX?

A cloud PBX, also known as a hosted PBX, is a business phone system that runs over the internet. With a cloud phone system, you don't need to have PBX equipment at your offices; a business VoIP provider does everything for you.

cloud-hosted VoIP phone system provides all the functionality needed by a modern business, such as voicemail, call forwarding, and of course, calling. Rather than setting up a server or system to run your phones, you'd use a VoIP provider such as T2K for your company's communications.

Hosted PBX is a Internet Phone System
A hosted PBX is an internet telephone system

Most often, a hosted PBX will use VoIP rather than legacy technologies such as ISDN and PSTN. VoIP and acronym for voIce over internet protocol, or more concisely, internet telephone calls.

We say that ISDN and PSTN are legacy technologies because, in 2025, BT will be turning off those networks, so all businesses and consumers will need to move to VoIP before then. Yes, that means everyone! The good news is that the industry is already geared up for the change, and there are plenty of VoIP services you can switch to that'll not only help avoid being cut off in a few years but also give you a far superior service.

How does a hosted PBX work?

VoIP enabled PBXs are entirely digital and use IP (internet protocol) to transmit your telephone calls (where the IP in "voice over IP" comes from). Whether you're working in your office with a handset or making a call via a softphone installed on your laptop, you'll be connecting to your hosted PBX via the internet.

Your VoIP phone or a softphone on your computer or smartphone will convert your voice to packets of data before transmitting them to either your hosted PBX or your on-premise one back in your office. From there, the call is routed over the internet using SIP lines and connected to the recipient's phone system and its final destination.

The diagram below shows a simplified view of how the technology works and highlights that your employees can work from anywhere and make and receive calls. 

Diagram showing how a hosted PBX works
Diagram showing how a hosted PBX works

Did you know: When data packets arrive at their destination, the VoIP system converts them back into sound, and all of this is done within a few milliseconds!

ISDN switch off - signalling the end for legacy phone systems

In 2015, Openreach announced that from 2020 you will no longer be able to buy ISDN services, and they are targeting a switch-off date for existing services of 2025. At the time, that gave businesses a decade to make the transition over to VoIP phone systems, but companies now have less than five years to make the switch. With hundreds of thousands of businesses using ISDN 2 and ISDN 30, the clock is ticking and now is the time to switch to VoIP.

The VoIP phone system from T2k has saved us serious expenditure and has changed the way we work for the better.
Steve Knell - Altogether Care
on Google

Choosing between a Cloud PBX and an On-premise PBX

The most significant difference between a cloud-based phone system vs a local system is who owns and maintains the equipment. If you have an on-premise system, you will buy and own the equipment and be responsible for its maintenance. Conversely, the VoIP provider owns the equipment and maintains it with a cloud system, and you pay a simple subscription fee. Buying your equipment usually entails significant investment and for most businesses is unaffordable and frankly today unnecessary,

If you buy a PBX solution for your office, you'll need to think about disaster recovery and what happens should the power get cut to the building or, worse, there's a fire. With a hosted PBX, your team can pick up their phones and plug them in anywhere with the internet and continue to work. As many businesses have seen during Covid, this flexibility is hugely beneficial. With on-premise phone services, you will need to think about battery backups for your servers and switches, along with ways of diverting calls should the building become uninhabitable. Things get complicated.

What are the benefits of a hosted PBX?

There are numerous benefits of moving your telecoms to the cloud and replacing your phone system with a hosted PBX. Namely, you'll save money, get more functionality, give your team more flexibility and future proof your business. 

Benefits of hosted PBX

Advantages of a Cloud PBX

  • Lower (often nil) initial hardware and set up costs.
  • Low monthly service cost.
  • Flexibility across offices, including homes
  • Feature-rich to level-up your workflows
  • Easy to add extra lines, perfect for scalability.
  • Upgrades, updates and patches are all included by the provider.
  • New advanced features are added regularly, benefitting all customers.
  • Worry-free reliability.

Cost reduction

Most, but not all businesses, will save money by moving to VoIP and indeed a hosted PBX. Calls made over the internet are significantly cheaper than those over ISDN and PSTN lines, especially if you make international calls. Many businesses currently use ISDN, and aside from the fact that it's being phased out, it can be expensive, especially if you have many lines. On the other hand, VoIP runs over your internet connection, so as long as you have sufficient bandwidth, you'll be able to save the money you were spending on ISDN and use it for something else.

Another benefit from a cost perspective is that as you don't own the infrastructure your phones connect to, you don't need to worry about the maintenance and upkeep. Your provider will be responsible for ensuring that the system is well protected, resilient and up to date, leaving you to focus on your business. Finally, you may not even need handsets if your team has mobiles or computers to install a softphone. A softphone is simply an app installed on your laptop, phone or tablet that connects to your hosted PBX; you can now take your business phone number (and low call rates) anywhere with you.

Joining T2K is one of the best if not the best business decisions we've made.
Paul Crisell - Vale Veterinary Clinic
on Google

Extensive feature set

Probably one of the most prominent advantages of a hosted PBX is that you'll have access to a vast array of features that will all be manageable via a user-friendly web portal. The types of features you will have previously have been reserved for companies with a big enough budget to buy an enterprise-grade phone system, and even then, many of the things included with a hosted PBX would be add-ons.

Features of a hosted PBX:

Our hosted PBX includes all of the following features:

Benefit of hosted PBX - unlimited VoIP phone numbers

Unlimited numbers

A significant benefit of getting a VoIP service is getting pretty much an unlimited amount of VoIP phone numbers. You can choose from local and national numbers and get them quickly and easily added to the system; you can even get international numbers if you've got a presence abroad, and the numbers will feed straight back into your hosted PBX. This is great from a marketing perspective if you want to show you've got a presence in a specific area or if you want to give people a local number to call when they are trying to call your company. Examples of the numbers we can provide are:

  • 01 & 02 geographic numbers
  • 03 non-geographic numbers
  • 0800 free phone numbers
  • 056 VoIP specific numbers
  • 0844 and 0843 premium numbers
  • 0870 numbers premium

Of course, if you're an established business, you will more than likely wish to keep your current range of numbers, which isn't a problem at all. Part of the process of switching to VoIP will be to port your numbers over to the new service. It only takes a few weeks, and we'll ensure that any disruption is minimised before and after the move. Importantly, make sure you choose a reliable partner for your hosted PBX as trusting a company with your precious business phone numbers is a responsibility that shouldn't be taken lightly,


Having a hosted VoIP PBX will immediately free you from the limitation of being tied to a physical phone line for your calls. As your business phone service will be internet-based, you can make and receive calls anywhere you have an internet connection. Take the pandemic as an example. If you had a hosted PBX, your team could have taken their handsets home, plugged them into their internet connections, and continued to take calls. Better yet, with our softphones, they wouldn't even need their handset; as long as they have a mobile or a laptop to hand, they'll be available. As we move forward and out of the pandemic, many employees will likely want to keep a certain amount of flexibility about where they work. Yes, working from home isn't always great, but on the flip side, having the option between the office or home is a nice balance. With the next generation of workers coming out of universities and the workplace, you can expect them to have high technological expectations. They're used to being online all the time and having the ability to communicate from anywhere. Businesses will need to adapt and to keep the best and brightest implement new technologies like hosted VoIP.


In times gone by, if you wanted to add more telephone numbers or indeed users to your phone system, you might need to upgrade your ISDN line and buy additional physical cards for your phone system and software licenses too. With a hosted PBX, that's no longer the case. A hosted phone system like our Horizon platform is hugely scalable, with it being able to support thousands of users, which means there isn't the risk of you outgrowing it unless you're the next Jeff Bezos.

The only thing we would say on the subject of scalability is that while our hosted platform can support thousands of users, there would come the point where it would be more cost-effective to buy the equipment yourself. If you're expecting significant growth in the next 5-10 years, please mention it to your T2k account manager, who'll be able to make sure whatever you implement takes this into account.

Easy to use

A web-based phone system is exactly what the name suggests, and with most of us know more than at home with web software and tools, almost anyone in your organisation can administer it (if you give them access). IT departments, office managers, call centre team leaders and more love the user interface as it allows them to do what they need to do and do it in the shortest time possible.

Of course, while it's easy to manage, we'll still be on hand for anything a bit more complicated, so while it's hosted, you're not alone with it.


Finally, let's talk about the reliability and resilience of a hosted PBX. As we've already mentioned, a hosted PBX is located in data centres; ours are dotted around the UK. We've invested heavily into their resilience, so the system stays up if one data centre goes down. That's a big if, though, you need to remember that data centres are themselves highly resilient, with onsite generators, multiple fibre connections and military-grade security. For most businesses, achieving this level of resilience isn't possible.

Disadvantages of a cloud PBX

  • You don't own the system
  • Fees can increase over time
  • You rely upon the stability of the provider to give you the service


By switching to a hosted PBX, you future proof your business, reduce costs, improve resilience, give your team more flexibility and superpowers from the stack of features they'll have at their fingertips. With all companies and consumers needing to transition to VoIP before 2025, the question is more when will you do it rather than if. 

We hope you found this guide to hosted PBX services in the UK useful. For more information or to speak to a VoIP expert about your specific needs, please get in touch.

Lee Clarke
Sales Director

Having worked for T2k for nearly 25 years, it's fair to say that Lee is an expert when it comes to all things telephony and business communications. Overseeing the commercial side of the business, he has helped the company evolve and grow through the decades. In recent years, and with the advent of VoIP and hosted telephony, Lee has made sure that T2k is at the forefront of technological developments. With a firm interest in helping businesses navigate the world of telecoms, Lee is responsible for the majority of the content on this website.

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