Last Updated on August 28, 2026

Highlights

• Businesses that are already established using a PSTN with an existing on-premise PBX and looking towards digital to take advantage of the VoIP benefits may adopt a SIP Trunk environment which allows the company to continue to use their existing equipment and expand into digital services such as video conferencing, portability, adding lines on demand and much more.
• Startups may go directly into a hosted PBX environment to immediately take advantage of the digital services.
• Versadial provides call recording solutions to both on-premise and hosted PBX phone environments.

Business managers typically face several decisions when designing telecommunications systems. One of the most common is to decide between two types of Private Branch Exchanges (PBX) technologies, on-premise or hosted. Both technologies have advantages and disadvantages over the other.

This article will examine both on-premise and hosted PBXs, determine which technology is best and describe how to record calls on both systems.

What is a PBX?

A PBX is a telephone switching system for a private organization that allows intercommunication between telephones within the organization without the need for external telephone lines. The PBX allows the sharing of central office trunks which enables employees to send and receive phone calls. The central office telephone lines connect to the PBX and the PBX provides the gateway to the Public Switched Telephone Network (PSTN). The PBX also allows intercommunication between multiple telephone lines within the organization while not accessing the PSTN. This reduces the number of required lines for the organization needed in the PSTN. In addition to establishing telephone connections between callers, the PBX will also maintain, disconnect and meter calls to provide accounting information.

What is an On-Premise PBX?

An on-premise PBX resides within an organization and is maintained by the company. A PBX provides telephone calling services to the business and does not require an internet connection to function. The organization owns and maintains both the hardware and software associated with the on-premise device. The term “on-premise” only refers to the location of the device. Depending on the capabilities, the PBX may still be able Voice over Internet Protocols (VoIP) such as voicemail, simultaneous ring, call logging analytics and many more services.

What is a Hosted PBX?

A hosted PBX is a PBX system that located externally from the organization, which is also known as a Virtual PBX. The PBX provides the same telephone calling services to the business as an on-premise PBX. The primary difference between a hosted PBX and an on-premise PBX is the location of the device. Typically, the hosted PBX is located in the telephone service provider’s data center. A hosted PBX removes the responsibility of purchasing, installing and maintaining the PBX away from the business and with the service provider. The service provider may setup an agreement to allow the business to lease the service. Unlike an on-premise PBX, a hosted PBX requires an internet connection to provide service to the business. Call quality may be affected depending on the reliability of the internet service provider.

What are the benefits of a Hosted PBX?

The benefits of a hosted PBX are the applications and portability this device provides. A hosted PBX provides a list of features that a traditional on-premise PBX system cannot provide and at the top of the list is soft phone support. Soft phones are devices such as desktop computers, smartphones, tablets, laptops or any hardware device that can support the software application for a softphone. Users may enjoy features on a soft phone that a hard phone on traditional on-premise PBX cannot support such as:

• Applications – may include built-in video conferencing, Customer Relations Management (CRM) integration to allow call center operators to see customer information and history before answering a call, SMS texting, and much more.
• Portability – soft phones allow users to make and receive calls anywhere the device may connect to the internet.

Businesses may also enjoy the maintenance free feature with a hosted PBX. The hosted PBX service provider typically maintains and updates the system. This removes the burden of support from the organization.

It is important to note, these features focus on traditional on-premise PBX systems. Businesses may bridge this gap with a cost-effective technology known as Session Initiation Protocol (SIP) Trunk.

What is a PBX SIP Trunk?

A PBX SIP Trunk is a PBX device that resides within the business and is maintained by the organization. SIP Trunks enable businesses to use their existing on-premise PBX and operate as a cloud-based telephone system. The SIP trunk provides the connection between the company’s IP enabled PBX and communications services provider in the cloud (internet). This allows the company to use the internet to provide telephone communications along with other features such as video calls, video conferencing, instant messaging and much more.

What are the benefits of a PBX SIP Trunk?

The benefits of a PBX SIP Trunk are the features such as applications and portability. SIP Trunks are seen as the bridge between an on-premise and hosted PBX because a SIP Trunk allows an organization to access these features. A SIP Trunk provides Scalability which allows businesses to easily scale their telephone system on demand by simply adding additional phone lines as needed. Businesses that currently use Integrated Services Digital Network (ISDN) with Primary Rate Interface (PRI) are limited to 23 lines. If an extra two or three lines are needed, the business must either purchase a new PRI interface board and order extra PRI line service or purchase an analog interface board and order extra analog PSTN trunks. VoIP and SIP Trunks allow the organization to add as many lines as necessary.

A SIP Trunk also provide compatibility which allows companies to continue working with the existing tradition on-premise telephony equipment unlike a hosted PBX.

On-premise vs Hosted PBX. What’s the best solution?

When business managers try to determine the best solution for their company, there is no one single best solution that fits every need. The requirements of each organization are different. Typically, if the business is already established using a PSTN with an existing on-premise PBX, the company may be looking towards digital to take advantage of the VoIP benefits. A SIP Trunk environment allows the company to continue to use their existing equipment and expand into digital services such as video conferencing, portability, adding lines on demand and much more. Startups may go directly into a hosted PBX environment to immediately take advantage of the digital services. There are advantages and disadvantages to each environment. It is up to the organization to determine which solution is the best fit for the company.

How to record calls on a hosted PBX?

For VoIP lines, Versadial offers a passive call recording solution known as Scenario #2. The hosted PBX connects to an on-premise network switch with a mirror port. The network switch can be configured to make a copy of all data traffic and send the data to the mirror port. A call recording server may be connected to the mirror port and becomes a listener. This allows the call recording server to record all calls.

How to record calls with an on-premise PBX and a SIP Trunk?

Versadial offers multiple configurations to record calls on a SIP Trunk environment. Scenario #3 taps recorder lines from the trunk side. A network interface controller (NIC) on the call recording server is connected to a mirror port on the switch. The call recorder collects and decodes all of the data from the mirrored traffic.

Other options to record internal phones or extensions directly are available in Scenario #5 and Scenario #4. To send call data directly from the phone to the call recorder, see Scenario #9.

Every business has different call recording objectives and telecommunications equipment. Contact us for assistance with determining the right solution to fit your needs.

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Last Updated on August 28, 2026