Hosted versus On-Premises Phone System

Desk Phone


If you’re thinking it’s time to replace your aging phone system, you may be wondering where to start.  There are many brands in the marketplace to choose from, but you also need to decide if a hosted versus on-premises phone system is the best option for your organization. Each option has its pros and cons as highlighted below:

On-Premises Phone System


> You have ownership and control over the entire system.

> Unless the system is leased, monthly fees will be low to none. 

> Standard analog or digital (PRI) phone lines supported by on-premises systems seldom have service disruptions. Monthly fees apply for each line.

> Calls over analog or digital phone lines are generally reliable and of good quality. 

> Custom feature development may be possible.


> Added costs will be incurred for moves, adds and changes which will typically need to be performed by the system installer.

> Periodic software updates may be required and typically come with added cost.

> System will have a fixed capacity.  If capacity needs go beyond what was originally anticipated, a new phone system may need to be purchased sooner than expected. 

> The proper infrastructure needs to be in place to accommodate the phone system – space, power, HVAC, security.

> Failure of the phone system or an outage of standard analog or digital phone lines will result in a busy signal, or no answer for callers, until the situation is resolved.

> Must check that the company installing and supporting the system is certified by the vendor as being competent, to help ensure a smooth transition.

> If the brand has limited licensed installers in your local area, finding a new one if needed in future, could present a problem for ongoing support, upgrades etc.

Hosted Phone System


> The up-front capital investment is much less with typically only IP phones to purchase (though these can often be rented) plus possible setup fees and training. 

> Easily scalable up or down as your organization changes.  You only pay for the services you use. 

> The equipment delivering your service is enterprise grade, regardless of the size of your business.

> Multiple location businesses can make nationwide calls by dialing inter-office extensions without incurring long distance charges.

> Greater self-serve capabilities and reduced costs associated with performing telephone moves, adds and changes

> Adding new features later, such as Call Centre queues or an additional Auto Attendant is easily done.

> Ability to route calls to any phone, anywhere in the world.

> If the local voice connection goes down, callers will still be able to reach your phone system (in the cloud) and leave voicemail or be routed to a mobile phone.

> Predictable flat monthly fee makes budgeting easy

> System maintenance costs can be minimal to none.

> No software updates are required.  This is handled by the host and is part of your monthly subscription fee.


> Voice quality is dependent on the quality of the Internet connection the voice traffic is traveling on.  If the Internet connection is unreliable, voice calls can be choppy, can get dropped or can be cut off altogether.  If your Internet connection is down, your phone system is down.

> If your data and voice traffic are sharing a single Internet connection, voice call quality will be affected anytime data traffic uses up most of the bandwidth, leaving inadequate capacity for voice call traffic. 

> Some have limited advanced features and don’t include call recording, contact centre, call reporting, conference bridges.

> No custom feature development capabilities.

> Monthly fees could be increased, and other fees could apply such as for cancellation.

> Monthly fee can be significant, especially as the user count grows and additional monthly fee features are added such as call recording, contact centre, call reporting, conference bridges

> You are dependent on the stability of your provider form an operations and financial point of view.


Having reviewed the pros and cons of a hosted versus on-premises phone system, one might ask whether it’s possible to combine the best of both hosted and on-premises phone systems to obtain an ideal solution.  One Canadian company has done just that.  Fibernetics’ NEWT Hybrid Cloud Phone System incorporates some equipment at the customer’s site, to manage functions such as local extension-to-extension calling, call recording and a customer self-serve configuration portal.  Other functions such as call routing, auto attendant, voicemail/voicemail to email and conference bridging, are handled in the Fibernetics cloud. This unique architecture enables excellent quality of service (QoS), even where Internet bandwidth availability is fairly low.    

Another key benefit of the NEWT system is that it is a single vendor solution. This means all aspects, from the local hardware, to the line your voice traffic travels on, to the cloud where calls are handled, are managed and controlled by Fibernetics.  This eliminates finger-pointing between non-affiliated third-party vendors and allows for quick diagnosis and resolution of voice network issues should they arise.  Parties typically involved in each scenario are:

On-premises System

Hosted System

NEWT Hybrid System

> Manufacturer

> Vendor

> Fibernetics: manufacturer, phone company, Internet provider, Helpdesk support

> Vendor/Certified Installer/Support

> Vendor Partner/Support

> Certified Installer

> Telco – phone lines

> Telco – SIP Trunks


> Internet Provider



BSC Solutions Group is a Certified Partner/Installer of the NEWT Phone System.  You can read more about the features and benefits of this system here, or give us a call for more information and a quote.