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No matter the size of your business, choosing between a host service provider and an on-site SIP trunking system for your PBX needs is going to require some careful analysis.

Hosting, for example, is often lauded as the better option for small businesses with a tight budget, but the reality is a bit more complicated. When it comes to choosing the best VoIP solution for your business, it is essential to know the advantages and disadvantages of an on-site SIP trunking service versus a hosted PBX option.


There’s no getting around the fact that on-site SIP trunking setup costs are comparatively high compared to hosted solutions, and it can be difficult for smaller businesses to meet these initial financial strains. There is simply no circumventing the need for new IP equipment, the costs of handling the installation, a long term maintenance of the on-site

A hosted PBX solution is so tempting for some businesses because it eliminates the large start-up costs that make on-site PBX so challenging for cash-strapped businesses. There are, of course, monthly fees associated with host services, but their low initial investment costs and built-in IT support make it a more affordable option.

In the long term, however, for those who can afford the initial investments, an onsite SIP solution can prove a financially sound choice. Research suggests that the total cost of ownership (TCO) of hosted system surpasses that of an on-site PBX after just three years.

Network Expansion

As your business grows, it will be easy to expand with either a host or on-site solution. The difference is that an on-site PBX with SIP is going to offer our business far greater flexibility and the ability to customize the system at your own convenience. It may cost a little more doing it yourself, but you can avoid the potentially higher monthly fees and/or penalties a host might charge for expanding.

Despite decreased flexibility and potential waiting periods, host providers can offer some benefits of their own. Ease of mind is one of the primary benefits, as they eliminate any direct risks to your business by handling the details and assuming responsibility for the expansion. For businesses that don’t already have an in-house IT team to handle the growth, a host service provider may be the right solution.

Management Control

Management and control will always be a major issue when it comes to hosted vs. on-site PBX systems. For some companies, on-site SIP trunking is a no-brainer as they strive for as much control over their network as possible. On-site PBX gives businesses complete control over their VoIP system and enable them to easily fluctuate their telecom needs in pace with any changes in their business. With that control, however, also comes the responsibility of managing the network. That entails maintaining upgrades, overseeing repairs, troubleshooting errors, IT oversight, expansions etc.

Other companies, especially smaller ones, may prefer to outsource their VoIP needs to a host service provider in order to avoid maintenance difficulties and the distractions involved with managing the system. These businesses lose control of their IP system, but the sacrifice enables them to maintain their focus on their business’s core product. Even large companies might look favorably upon outsourcing their VoIP needs in exchange for a hassle free telecom solution.

Quality of User Experience

During ideal conditions there should be little difference in call quality between a host service provider and on-site SIP trunking. Ideal conditions, however, are unrealistic. The moment network traffic becomes congested the differences between these two VoIP systems becomes apparent.

As voice and data packets compete for preference during heavy traffic periods, an on-site PBX with SIP trunking will maintain call quality by ensuring that the voice packets receive priority access to the network. This doesn’t happen with hosted VoIP. Data and voice packet preference is unmediated during heavy network usage, typically resulting in a loss of call quality as they fight for network access. For an added cost, a host provider may offer Session Border Controller (SBC) to facilitate the matter, but it may be cheaper to avoid the issue entirely with an on-site PBX that is properly managed.

Although hosted and on-site VoIP achieve the similar results, they use different means and offer different options to do so. When evaluating VoIP solutions businesses should be looking at the desired level of network control, management responsibility, IT-support, IP budget, projected network traffic, long-term vs. short-term financial investment, and future company growth.