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On-Premise vs Hosted PBX: Blockbuster or Netflix?

I’m sure you can recount back to when a movie night meant hitting up a local Blockbuster and being reminded to “Be Kind, Rewind” with each purchase. The video libraries were eventually over turned by companies like Red Box and Netflix, making movie renting easier than ever imagined. The beloved 90s pastime has faded away along with Dunkaroos, Beanie Babies, and the Macarena.

On-premise PBX is to Blockbuster as hosted PBX is to Netflix. If it’s been over a decade since you’ve taken the SAT’s, let me explain.

On-premise PBX means that your business’ phone system resides at your location. Similar to renting a DVD the old-fashioned way, you pay a rental fee to temporarily own the system. You can physically hold it, see it, place it wherever you want, and use it in any way whether that is to its full technical capabilities or as a coaster for a beverage.

You have the freedom to adjust, delete, and create users and add open source features as desired. However, this means you will need to divvy up someone’s time to properly manage the PBX system.

It is also probable that there will be times when a technician will need to lend assistance with upgrades.

This is where choosing the right phone company really comes in to play. Companies may have limited staff or simply lack of care. Before marrying a phone company, research, research, research. If you want to purchase an on-premise PBX, search for providers that offer 24/7 emergency technical support.

Although you probably won’t be chanting “no more late fees, no more late fees!” when it comes to paying your telecom bill, it is possible that the cost of an on-premise PBX will decrease over time.

On-Premise PBX breakdown:

– You have control
– Cost potentially decreases over time
– Features can be added without extra fees
– Complete knowledge of what your system is capable of

– You have control
– Potentially dealing with customer support that is not easily accessible
– Time allocated to managing system

Right now there are 64,000,000 Netflix subscribers. I commend you if you are one of these honest people who pay the $7.99 per/month for their own account instead of mooching off a kind friend or relative (I cannot confirm nor deny that I am one of these people). With this honesty, you have taught yourself the concept of a hosted PBX system and how cloud technology has made it possible to own something without really owning it.

Hosted PBXs are typically provided by a telephone company or service provider, using equipment located in the premises of a telephone exchange or the provider’s data center, and your phone company will charge a monthly fee for your usage. And just like with Netflix, once you stop paying for it, you stop using it.

The phone company takes care of new feature set ups and installations as well as patches and upgrades. Depending on the company, this may take longer than you want it to.

They will also likely have a backup power supply in case of emergency which means your business will be unaffected phone-wise if you lose Internet. Calls can be forwarded to mobile phones or to voice mail.

However, if you simply have a weak Internet connection, the quality of your phone interactions will take a hit. It seems logical to say that you would want your phone company and Internet company to be the same place so if there is an issue, you aren’t playing phone tag all day.

Hosted PBX breakdown:

– Out of sight, out of mind
– Company takes care of upgrades
– They are equipped to handle emergencies
– Features can be added without extra fees

– Upgrades could take longer depending on the provider
– If your Internet and phone providers are different companies, it may be difficult or take longer to communicate issues

Just like the movie rental scene, the telecommunication world has its head in the clouds and is heading towards the direction of hosted PBX systems. However, for some people that retro, Blockbuster style is the perfect fit.

Again I say research, research, research. You’re on the right track by investigating the product; now it’s time to research phone and Internet companies. You can start here.


Jaime Baldwin- 1stel Digital Marketing Specialist

About the author

Jaime Baldwin

Jaime Baldwin

Jaime Baldwin is a PR and Social Media Specialist at our advertising agency, werkLabstudios.