Hosted VoIP vs. On-Premises VoIP

by | Oct 20, 2018 | IP Telephony | 0 comments

A look at the differences in the capabilities of on-premises and hosted VoIP.
Cloud PBX Voip Telephony

At first, VoIP IP Telephony designs only took on-premises networks into account. This means you had to install IP PBX equipment locally.

As VoIP evolved and cloud technology took over local infrastructures, hosted VoIP was introduced.

There are differences in the capabilities of on-premises and hosted VoIP. Let’s have a look:

On-Premises VoIP

Hosted VoIP

Installation and Setup

Needs local PBX equipment

Requires SIP trunking

Requires long hours and on-site presence for setup

No need to purchase PBX equipment

A reliable internet connection does the trick

Fast setup

On-site presence is not required

Multiple Offices

More equipment needed to connect multiple offices

Easy inter-office connectivity


Only IP Phones

Multiple options (handset, mobile app,
web dialer)

Call Transfer

Call forwarding to mobile or landlines only

Multiple call forwarding options (any device)


Scaling can be complex and requires long man hours

Scalable as desired Instantaneous configuration


High upfront investment and maintenance fees

No initial investment, low monthly fees

Usage and Maintenance


Can incur high costs for long distance calls

Unlimited continental calls

International calls at a fair rate

How Does Hosted VoIP Work?

In VoIP telephony, there’s nothing like pulses or tones. Everything is handled as data packets on an IP network.

Once your voice communication is sent over the Internet in data packets, it’s transmitted to the IP router that is closest to the called party’s network. A VoIP call can be transmitted to any type of phone worldwide:


  • If the called party uses traditional telephony, the digital signal is converted
    back to analog by a VoIP gateway.
  • If not, it’s delivered directly by a digital signal that can be picked up on a desk phone or a softphone.

Typical Hosted VoIP Diagram

What Are the Benefits of Using Hosted VoIP?

VoIP will help increase any business’s  productivity and help owners achieve a higher return on investment. Here’s why:

Advanced Features

Thanks to digitalization, VoIP unifies different communication technologies in the phone system to deliver great features for the business, such as voice-to-email, call forwarding, logs of incoming and outgoing calls, caller ID, and more.

More Flexibility

VoIP has made it easier for companies to own phone numbers worldwide, freeing them from complex registration and set-up processes. Moreover, VoIP makes it possible for mobile workers to stay reachable anytime using their connected devices.

Best Sound Quality

Today’s VoIP solutions outmatch the voice clarity of traditional phone networks. Vendors have made significant improvement to increase call quality and eliminate call drops, so you can no longer tell the difference between a VoIP call and a traditional one.

Cost Savings

When you’re looking for business features, traditional phone systems can be a costly investment. This is due to setup, installation and maintenance fees for the required hardware equipment. VoIP phone systems significantly lower or even eliminate these costs. With hosted VoIP, you won’t have to buy any local phone equipment.

COMMbits Cloud PBX

Always-On, Complete and Reliable Cloud PBX Business IP Telephony System Delivered Right from the Cloud




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Hosted VoIP vs. On-Premises VoIP