An on premise phone system, often called an on premise PBX, is a business phone system installed and managed at your premises. It gives your business more control over hardware, configuration, call routing and long-term setup.
Hosted PBX works differently. Instead of keeping the main phone system equipment on site, the system is hosted in the cloud and managed by a provider.
Both options can work well. The right choice depends on your current setup, budget, IT support, locations, remote working needs and future plans. In this guide, we explain how on-premise PBX compares with hosted PBX, where it still makes sense and what to consider before choosing the right phone system for your business.
What Is an On Premise Phone System?
An on premise phone system is a business telephone system where the main PBX equipment is installed at your business premises. PBX stands for Private Branch Exchange, which manages internal and external business calls.
With an on premise PBX, your business can control how the system is configured. This may include extensions, call routing, voicemail, hunt groups, call transfers, call recording, auto attendants and user permissions.
Older on-premise systems were often connected to analogue or ISDN lines. Many modern on-premise PBX systems can now work with SIP trunks, allowing calls to be made and received over an internet connection.
This means an on premise phone system can still be part of a modern business communications setup when it is reviewed, configured and supported correctly.
Hosted vs On Premise PBX: What Is the Difference?
The main difference between hosted and on premise PBX is where the phone system is managed.
With an on premise PBX, the main system is installed at your site. Your business, IT team or telecoms partner manages the hardware, configuration and ongoing support.
With hosted PBX, the system is hosted in the cloud by a provider. Your business accesses the phone system through an internet connection, usually with monthly user licences.
An on premise PBX usually gives more control over hardware and configuration, but it often needs more upfront investment and ongoing maintenance. Hosted PBX usually has lower upfront costs and is easier to scale, but it depends heavily on internet connectivity and provider management.
Neither option is automatically better. The right choice depends on whether your business values control, flexibility, ownership, remote working, long-term cost management or simpler day-to-day support.
Advantages of an On-Premise PBX Phone System
An on-premise PBX can still be a strong option for businesses that want more control over their phone system.
Because the system is installed on site, your business has greater control over the hardware, configuration and call handling rules. This can be useful if you have specific requirements around call routing, departments, internal extensions, call recording or integration with existing systems.
Another advantage is ownership. Some businesses prefer to keep critical communication equipment under their own control rather than relying entirely on a cloud-hosted platform. This can suit organisations with internal IT support, established infrastructure or specific operational requirements.
An on premise PBX can also support flexible call handling. You can configure how calls move between teams, how voicemail is managed, how calls are routed out of hours and how departments receive enquiries.
For some businesses, the long-term cost structure can also be attractive. The upfront cost is usually higher, but ongoing costs may be more predictable depending on users, maintenance, SIP trunks and support.
Disadvantages of an On-Premise PBX
An on-premise PBX is not right for every business.
The main drawback is that it usually requires more upfront investment. Hardware, installation, configuration and support all need to be considered before the system goes live.
There is also more responsibility. The system may need maintenance, upgrades and technical support over time. If your business does not have internal IT resource or a trusted telecoms partner, this can become harder to manage.
On-premise PBX can also be less simple for remote or multi-site teams. Remote working is possible, but it may need extra configuration compared with hosted PBX or cloud VoIP.
For businesses that want simple scaling, provider-managed updates and less on-site equipment, hosted PBX may be the easier option.
On-Premise PBX Costs vs Hosted PBX Costs
Cost is one of the biggest factors when comparing hosted vs on premise PBX.
An on-premise PBX usually has a higher upfront cost because you need hardware, installation and setup. There may also be costs for handsets, licences, maintenance, support, SIP trunks and future upgrades.
Hosted PBX usually has a lower upfront cost. Instead of buying and managing the main system hardware, your business normally pays a monthly cost per user or licence. This can make budgeting easier, but costs can increase as more users are added.
When comparing costs, look beyond the first invoice. Think about:
- Number of users
- Existing hardware
- Current phone lines
- SIP trunking requirements
- Handset needs
- Support and maintenance
- Remote working
- Future growth
- How long you plan to keep the system
The best-value phone system is not always the cheapest at the start. It is the one that fits your business now and continues to support the way you work in future.
How the 2027 PSTN Switch-Off Affects On-Premise PBX
The UK is moving away from the old analogue phone network. The Public Switched Telephone Network, often called PSTN, is being retired by the telecoms industry by January 2027.
This affects businesses that still rely on older analogue lines, ISDN, lift lines, alarm lines, payment terminals or other services connected to legacy phone infrastructure.
If your business has an older on premise phone system, now is a good time to review it. You may not need to replace everything, but you do need to understand whether your current setup is ready for digital voice services.
For many businesses, SIP trunking can help modernise an existing PBX by allowing calls to run over an internet connection. For others, hosted PBX, VoIP or a hybrid phone system may be more suitable.
The important step is to review the system before old services are withdrawn, not after they become a problem.
When Should You Choose an On-Premise PBX?
An on premise PBX may be right for your business if you want more control over your phone system and have the right support in place.
It may suit your business if:
- You already have suitable infrastructure
- You want to keep the main phone system on site
- You need more control over call routing and configuration
- You have internal IT support or a trusted telecoms partner
- You want to connect an existing PBX to SIP trunks
- You have specific operational or compliance requirements
- You want to review long-term running costs rather than only upfront price
For the right business, an on-premise PBX can still be reliable, flexible and practical.
When Should You Choose Hosted PBX?
Hosted PBX may be better if your business wants a simpler cloud-based phone system with less hardware to manage.
It may suit your business if:
- You want lower upfront costs
- Your team works remotely or across multiple sites
- You want to add or remove users more easily
- You do not want to maintain PBX hardware
- You want provider-managed updates and support
- You are replacing an old phone system completely
- You want easier access through softphones or mobile apps
Hosted PBX is often a strong fit for businesses that want flexibility, simple scaling and less on-site maintenance.
Is a Hybrid Phone System a Better Option?
For some businesses, the answer is not strictly hosted or on-premise.
A hybrid phone system can combine elements of on-premise PBX, hosted VoIP, SIP trunking and cloud features. This can be useful if your business wants to keep some existing infrastructure while adding more modern functionality.
For example, you may want to keep an existing PBX but use SIP trunks, remote access or cloud-based call handling. Or you may want to move gradually from older systems to hosted VoIP.
A hybrid approach can be useful when a full replacement is not needed straight away, but doing nothing is no longer the best option.
How to Choose Between Hosted and On-Premise PBX
Before choosing between hosted and on premise PBX, focus on how your business actually uses its phone system.
Ask:
- How many users do we have?
- Do we work from one site or multiple locations?
- Do staff need remote access?
- Do we already have a PBX system?
- Are our current phone lines ready for the PSTN switch-off?
- Do we need advanced call routing or call recording?
- Do we have internal IT support?
- Do we want to own hardware or reduce on-site equipment?
- Are we planning to grow?
- Do we need CRM or Microsoft Teams integration?
If the answers point towards control, existing infrastructure and specific configuration needs, on-premise PBX may still be a good fit. If they point towards flexibility, remote working and easier management, hosted PBX may be better.
Speak to Juno Telecoms About PBX Phone Systems
Juno Telecoms helps businesses compare, upgrade and manage phone systems without unnecessary jargon.
If you are comparing hosted vs on premise PBX, we can review your current setup, check whether your phone system is ready for digital voice and explain whether on-premise, hosted or hybrid would be most suitable.
We can support you with on-premise PBX systems, hosted VoIP phone systems, SIP trunking, hybrid phone systems, business phone systems, call routing and system upgrade planning.
If your current phone system needs reviewing, now is the right time to get clear advice.
Speak to Juno Telecoms about on-premise PBX and hosted phone systems.
