How Does Hosted PBX Work

Ever heard of Software-as-a-Service (SaaS)? It works like this: For a set price per month, companies let you download and use their products. Kind of like renting, but with more ownership and freedom.

Hosted PBX is similar; the provider manages all telephony equipment and call logic. The user needs only to connect a device.

Onsite versus Hosted PBX

Traditionally, companies would invest in onsite PBX to unify local users under one phone system. The PBX would divert inbound calls to different users and allow each to share the external lines for outbound calling (Figure 1).

With cloud technology, the handling of calls can happen offsite (Figure 2). This saves businesses from having to purchase their own PBX equipment and support it. Moreover, as an online solution, internal users needn’t be local. Users can connect to the cloud from anywhere and access the same great features.

How Hosted PBX Works

Figure Two

  1. (A) The phone provider hosts the PBX
  2. (B) Users connect over the Internet
  3. (C) Users configure the phone system from the browser
  4. (D) Users plug devices into the router or tell the system to forward to a regular landline/mobile phone

What Are Virtual Phone Numbers?

Virtual numbers, or DID (Direct Inward Dialing) numbers, act as entry points into a hosted PBX system. They serve as gateways between regular phone and Voice-over-IP (VoIP) networks. VoIP is a method of delivering voice audio online instead of by landline or cellular tower.

People dial virtual phone numbers no differently than other numbers in a specific location. You can find virtual local, national, and toll-free numbers with hosted PBX as you might with a traditional phone system. The difference: you can buy these numbers without maintaining a physical presence in that location.

Local Phone Numbers

Sometimes called geographic phone numbers, local DIDs come front-loaded with city prefixes (i.e. 212 for New York City). Local numbers are the most globally accessible, but callers outside of the city incur long-distance charges.

National Phone Numbers

Commonly referred to as non-geographic phone numbers, national DIDs allow callers from anywhere in a specific country to reach the number at a local rate. For some countries, national numbers are only reachable from within the country.

Toll-Free Phone Numbers

The owner of a toll-free number pays for all incoming minutes so that callers avoid local and long-distance fees. A shared-cost phone number works similarly: the owner partially pays for inbound calls. The number is accessible at a local rate for anyone in the country, and the owner covers any additional long-distance charges.

How Do I Make a Phone Call Online?

Many new customers ask, “Do I have to buy new phones to use a hosted phone system?” In short, the answer is no. PBX call forwarding lets you send calls to ordinary devices. This way you can answer calls on your existing landlines and mobile phones. For outbound, you will require a phone that hooks up to the internet.

IP Desk Phones

IP desk phones, or SIP devices, plug into routers/modems instead of phone jacks. They connect via Ethernet, making them highly portable. Unlike landline systems, you need not install IP desk phone lines.

SIP devices look like traditional phones. However, some models carry hotkeys—buttons for fast access to PBX features. Common hotkeys include redial, transfer, hold, and menu.

Some phones offer more built-in features than others and some come with added hardware. For example, you can find SIP devices with wireless network cards and conference speakers.

  • Wi-Fi phones resemble mobile phones more so than desk phones. With them, you can walk around freely within the radius of a given local network. They often come with fewer features than their desktop counterparts, but they improve portability.
  • Conference phones have high microphone/speaker performance for group usage. Unlike desktop phones, users talk at the device rather than into it. It's like speaker mode on other phones—only crisper, clearer, and without feedback.



Softphones are voice applications for computers. They work like ordinary SIP phones but rely on input devices (i.e. mouse and keyboard) and headsets or microphones. Softphones are the cheapest way to connect to an online phone system—most are free!

  • Headsets allow workers to take and place calls hands-free. They connect in various ways: USB, Bluetooth, or audio jack. Most promise a “plugin and play” experience. Simply connect to your device and launch the softphone—no lengthy installations.
  • Smartphone apps exist for online calling. They work like desktop softphones over cellular data.

Analogue Telephone Adaptors

All landlines can receive phone calls. However, to place calls, you need an Analogue Telephone Adapter (ATA). ATA boxes convert landline signals into digital ones. They are a type of bridge between PSTN and data networks.

Note that upgrading an analogue phone system can be costly. Since entry-level SIP devices are rather inexpensive, replacing old hardware may be more cost-effective.

Device Accessories

  • Expansion Modules: Some SIP devices support external hotkey panels known as expansion modules. Such devices are compatible with only specific models and manufactures.
  • Wall Mounts and Foot Stands: Wall mounts hang devices as you might with a traditional phone. Foot stands tilt devices forward. Plus, they connect can many phones and modules together.
  • Uninterruptible Power Supplies (UPS): UPS devices protect against power surges and failures. Plugin your networking gear, phones, and computers into one or more UPS devices and enjoy hours of backup calling.

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