Greg Brashier, COO of Virtual PBX (, says:

The first hosted PBX was introduced to the market in late 1997 by Virtual PBX. Instead of buying on-premise telephony hardware, users contract for PBX services from a hosted PBX service provider.

Hosted PBX customers don’t buy, install, or maintain any PBX equipment. Instead, the PBX equipment is kept by the service provider, who then shares access to the system among many users (customers). Key functions that can be provided by a basic hosted PBX include:

• Present a single business number that gives access to all company employees and departments
• Answer calls with a custom business greeting
• Allow employees to take calls and work anywhere they have a phone instead of needing to be centralized in one main office
• Offer Automatic Call Distribution (ACD) queuing (ie: a menu of options for directing the call, such as connecting to a specific extension or to a department)
• Provide a directory of employee extensions accessible by inputting digits corresponding to employee first or last names
• Place callers on hold when they are waiting for an available department or employee
• Play music or custom messages whenever callers are waiting on hold
• Take voice messages for any employee extension, for a department, or for the company in general
• Allow transfer of calls between extensions
• Conference multiple incoming calls with employee extensions
• Provide detailed call records and real-time system management

In today’s down economy, businesses of all sizes are looking for cost-effective services and tools that will allow them to deliver a professional phone experience. Hosted telephony lets businesses get high end telephony features without spending a lot of money for phone switch hardware.

Hosted PBX services are traditionally more affordable since customers don’t need to make any major up-front investments. Additionally, because the service is hosted, customers don’t have to manage expensive hardware or worry about technology refreshes.

In addition, the better hosted PBX providers continually add to the capabilities and features of their systems and pass along the new features to clients without charge. Coupled with the virtually unlimited scalability of hosted systems, this means no added cost for upgrading systems for added users or new feature requirements.

The main impact on data centers and the IT department will be the potential need for added bandwidth and quality monitoring for telephony needs. Infrequent packet loss in data streams has little effect on users, but packet loss in voice streams can cause lines to drop or voice quality to diminish. Also, IT personnel will have to learn some new terms and technology associated with telephony.

There are two types of hosted PBX systems.

If using a hosted IP-PBX, you use the Internet to make and receive phone calls. Depending on the size of your business, you’ll may need to implement T1 lines to handle the additional bandwidth. If you use this same line for your company network, you may need to keep a closer eye on servers to make sure the network is performing optimally and you are still getting the quality of service from your servers and systems.

Traditional hosted PBX’s leverage the PSTN, therefore there is no real disruption to the data center. Since all the equipment is hosted offsite by your provider, IT managers don’t need to worry about the equipment and software.