IP PBX Hardware vs. Hosted/Virtual IP PBX (PBX as a Service)


Modern Phone systems are IP based; your calls are carried across your broadband/Internet connection and interconnect with the regular PSTN (landlines/mobiles) through an ITSP (Internet Telephony Service Provider) who provides your call billing and incoming phone numbers. This Interconnectivity is known as your ‘call trunks’. Your telephones in the office are IP phones which connect to your LAN using regular Ethernet/IP (or can be cordless, using WiFi or DECT).

Like traditional PBXs (call switching systems - your 'switchboard') you still want individual extensions and features such as queues, groups, voicemail and internal calling. This is the job of your IP PBX.

When you install your own physical IP PBX (in a data centre, at your HQ or branch office), such as our VigorBX 2000, you pay for the PBX hardware and then own it outright; there is no monthly rental for the PBX. Your IP phones then communicate with the IP PBX, which in turn connects to the ITSP/SIP Trunks for connectivity to the outside world.

A hosted or virtual IP PBX works in exactly the same way except that the PBX is owned and operated by your ISP or ITSP at their premises. The only hardware at your end are the IP phones, each of which connects to the PBX via your broadband. So, the main difference between owning your own physical IP PBX and a virtual PBX is ownership of the hardware and responsibility for connectivity and operation. In both cases, your extensions can be local, remote or anywhere in the world, thanks to IP.

In most cases, if you buy your own PBX, it will be installed at your own premises, and in the case of a virtual/cloud PBX, the PBX hardware is at the ISP/ITSP end. The diagrams below show the two scenarios - the top diagram shows having your own PBX. In both cases, you still need a router, but with the DrayTek VigorBX 2000, the router and PBX is combined into one unit, as well as your WiFi.

Above : Your own physical PBX, installed in your office.

Above : Virtual PBX, provided by remote ISP/ITSP

All IP PBXs support remote extensions, so whether the PBX is in your office/HQ or a virtual one in the cloud, your extensions can be anywhere on the Internet, for example if remote/branch office, in the homes of teleworkers or even softphones (VoIP apps) on user's smartphones. Remote and local extensions (IP Phones) form part of one complete phone system and you can call/transfer or distribute calls seamlessly between extensions whether they are local or remote:

Above : IP PBX with local extensions, remote extensions and an extension on a softphone app. All
extensions can be part of calling groups, and call and transfer calls between each other seamlessly.

Cost Comparisons

Cost is an important issue when comparing buying a PBX vs. rental of a virtual/cloud service. Most virtual PBX services charger 'per extension'. In all cases, call charges, SIP trunks and incoming numbers need to be subscribed to/paid for.

Local PBX Hosted PBX
Scalability / Capacity As per product specification Virtually unlimited
Inter-Extension Calling Local/LAN Via Internet
Cost per month per extension None 10 (average)
Cost of PBX Hardware 500 (e.g.) 0
DrayTek PBX includes router/firewall/WiFi ? Yes -
Integration of analogue lines (FXO Ports) Yes -


Cost of PBX with 10 extensions over 3 years (exc. trunks/calls)

500 4320

As you can see, the initial cost of having your own PBX is higher as you’re paying for the PBX hardware whereas with a hosted PBX, there is no initial outlay as it’s a monthly rental model. Both examples exclude the costs of your IP phones, router, switch, IP trunks and call costs which will be similar for both.

Enhanced PBX Features

If you own your own PBX hardware, it will typically come with all of its features, out of the box. With a hosted virtual PBX, some features may be add-ons or optional additional rental per extension. This might include an auto-attendance ('Press 1 for sales'), voicemail or call groups. Check what features you need and whether they are included with your PBX or virtual hosted PBX service.

DrayTek IP PBX's include the router/firewall too!

As DrayTek’s IP PBX is combined with a router/firewall, you may be purchasing one of those anyway, so you can deduct the ‘router’ element of the cost from your comparison calculations. DrayTek's VigorBX 2000 router and IP PBX combined provides a full features hardware PBX, plus the regular features of a DrayTek router/firewall and WiFi base.