Anavon Technology Group: What is On Premise PBX Phone System? How Does it Work?

When people start businesses, it generally seems like such a simple task. They have a product or service they want to offer and they set about doing it. Eventually, however, if they are successful in their aim of providing a product or service the public actually wants, it just introduces a whole new series of headaches. From hiring new staff to finding office space to developing supply lines, owning, running, operating and growing a small business, not to mention a large one, brings all kinds of unforeseen headaches. One of these is choosing a phone system. Few people realize when they start or run a business what kind of headaches simply choosing the right phone system can create.

Today’s marketplace offers a dizzying array of options when it comes to such a basic need as a telephone. There are PBX systems, VoIP, Key KSU less and KSU systems to start with, and then a mix of hybrid options and a wide range of options within each of the main types. One these options is the On Premise PBX system. Here is a brief overview of this type of system, what it is, how it works and how it is different from the other types of available phone systems.

What is it?

PBX stands for Private Branch Exchange and is a private telephone network for use within a single company or building. The drawback of this type of system is that these systems require a vendor to install and manage the system and the phones are proprietary. This means if you change phone companies, you have to have all new phone lines installed. The cost of changing providers and installing all new lines is prohibitive, which puts businesses somewhat at the mercy of the provider they choose. Conversely, this is the best type of system for large companies with 75 or more employees and offers a wide range of features, functions and customizable options.

Today, there are two types of these systems to choose from: On Premise or IP. On premise is a physical system that utilizes physical lines and trunk lines for outside extensions. Because On Premise systems rely on public trunk lines, they are limited to how many lines that can be operated at any given time. While they may have 75-150 internal extension, they may only have 10-15 trunk lines that can be used at any given time to make outside calls.

IP (VoIP) or hosted systems are cloud based and therefore can theoretically handle an almost unlimited number of internal extensions and external calls all at the same time. IP systems are fairly new and there has been a great deal of buzz about them. While an On Premise system can cost around $75,000 to install, an IP system may only cost around $25,000 to get up and running. This may seem like a great deal at first, but over time, the costs of an On Premise system generally taper off, while the costs of an IP system often rise over time. Over a 5 year period, there is evidence that an On Premise system actually costs significantly less than an IP system over the same period of time.

How Does It Work?

Like most everything in the modern world, the “system” is just a computer that directs phone traffic. An On Premise phone system just has to direct phone traffic, while an IP system has to direct both phone and internet traffic. One of the pitfalls of an IP system is that when internet traffic is high, it will also have an effect on voice traffic. The main computer on IP phone systems acts as a gateway that gives more data access to either phone or internet traffic. The other drawback of hosted or IP systems is that if the internet is down, so are your phone lines. With an On Premise system, you can lose internet but your phones will still work.

One other notable advantage of an On Premise system versus VoIP is security. VoIP systems are vulnerable to almost all of the same issues that any internet based system is, such as fraud, viruses and worms, Vishing (VoIP Phishing), SPIT (Spamming over Internet Telephony), call interception, hacking and denial of service attacks. An On Premise system uses a regular Public Switched Telephone Network (PSTN), sometimes referred to as Plain Old Telephone Service (POTS), and is one of the most secure methods of talking to someone other than being in the same room with them.