Hosted, Virtual PBX

Hosted, cloud-based PBX systems are the virtual equivalents of the physical equipment used by traditional business phone systems and provide a suite of central functions allowing employees to connect with one another and to the public switched telephone system (PSTN). The switching system is not installed on-site but supported by one or several remote servers. Hosted PBX systems don’t require maintenance, manual configurations, nor are they vulnerable to threats of natural disaster or inaccessibility that can leave your business disconnected.

A PBX, or Private Branch Exchange System, is a device that connects office telephones in a business with the public telephone network. The central functions of a PBX system are to route incoming calls to the appropriate extension in an office, and to share phone lines between extensions. Many functions (automated greetings, recorded messages, dialing menus, connections to voicemail, automatic call distribution queues, teleconferencing, etc) can be added to the basic switching system to better suit the business it serves. Without the physical limitations of the original, physical technology, hosted PBX systems can be infinitely changed and amended to fit a business.

The central functions of a hosted PBX service are identical to those of hardware PBX systems installed at the user’s premises. The main difference is that hosted PBX customers don’t buy, install, or maintain any PBX equipment. Hosted PBX “equipment” is technology owned by a service provider who sells access to the system to its users.

Hosted PBX systems offer service defined by one of two things. PBX software is often reserved for instances when the internet is too heavily trafficked and a PSTN needs to be used or, if a company has their own PBX on site, PBX software can often serve to compliment that existing system. The vast majority of hosted PBX, however, refers to a complete, cloud-based hosted PBX system, not just software. The first hosted PBX was introduced to the market in late 1997 by VirtualPBX. Regardless of the source of the connection and unlike traditional PBX switches, however, users contract an Application Service Provider (ASP) for PBX services in lieu of purchasing equipment.


Hosted PBX systems have the same key functions as traditional PBX’s, in addition to the ability to route calls to any phone, anywhere in the world, rather than just to phones wired directly to the PBX inside an office environment. Hosted PBX systems are infinitely customizable, have much lower entry costs, lower support costs, are easier to manage, have greater flexibility, and they have dramatically improved scalability compared to traditional PBX systems. VirtualPBX supports a variety of unique features, as well, specifically:

Call Capacity

Hardware PBX systems can only handle as many calls as the number of incoming lines in the system. Hosted PBX services use systems with far more lines than an affordable premise-based system and ensure no busy signals.

Fault Tolerance

A well-designed hosted PBX incorporates redundant components and multiple PBX systems with automatic fail-over. No single component can bring the system down, and even failure of an entire system simply rolls calls over to another backup system.

Distributed Administration

With web-based management portals, hosted PBX users can manage the entire system remotely. User extensions, queues, and even recorded messages, call recordings, faxes, and any other system function can be programed without a technician and at any time. Permissions on which users can access the management platform can be distilled to the individual extension to manage just their availability or broadened to system, all from anywhere they have access to the internet.


Some functions of premises equipment are hard for any hosted system to replicate, such as sharing a limited number of business phone lines among a larger number of users. In a hosted system, each user needs to have a separate line. This is often offset by the high call capacity and scalability of a hosted system.


How much a hosted PBX service costs depends on the provider and the quality of the service. More robust business systems will include higher-end features like ACD queuing instead of hunt groups, integrated conferencing, and real-time monitoring. It is not uncommon for hosted PBX providers to have no setup fee at all, and for companies already in business there is not even a cost for new phones, seeing as how most already have cellular and/or desk phones.

Ongoing costs include the cost of phone lines, hosted service extension fees, and per-minute charges for incoming calls. Service providers complete support and maintenance tasks, which eliminates the need to retain specialized technical staff. The cost for incoming business telephone lines vary widely, but usually fall between $10 and $20 per month plus taxes and fees. In addition to monthly service fees, most hosted PBX providers have some cost per minute for incoming phone calls that typically run between 4 and 8 cents per minute.

Typical Costs for a Hosted PBX System

5 User System 40 User System
Up-Front Costs (System and Installation) None None
Per Month Per Year Per Month Per Year
Hosted PBX Service Fees $45 $540 $95 $1,140
Monthly Hardware Payment $0 $0 $264 $3,168
Total Costs $45 $540 $359 $4,308

Phone lines are $15/mo per line. Five-user system costs $45 per month and includes 1,000 free minutes. Forty-user system costs $95 per month and includes 2,000 free minutes. Usage is projected at 200 inbound minutes per employee, with overage on 40-user system at 4.4 cents per minute.