Hosted PBX vs. VoIP vs. SIP Trunking

How are Hosted PBX, VoIP, and SIP Trunking different, and what role do they play in business platforms like Microsoft?


Moving your business phone system to the cloud is a big decision - one that can serve your organization quite well. Companies with VoIP services often enjoy better efficiencies across their operations and the advantages of cost savings by cutting their monthly telephone bills in half. With landlines costly to maintain and communication solutions intuitively designed around automation, a cloud-based system may be the best solution for any business seeking a modernized calling platform. 

If you’re ready to move your existing phone system over to the cloud, one of the first decisions you’ll have to make is whether to go SIP trunking or hosted PBX. Both have excellent qualities to build up your brand communications, but it’s important to go over exactly what these technologies do and how they work before confirming your decision. 

In this quick guide, we’ll compare SIP trunking and hosted PBX to help you decide which solution is right for you. 

What is a PBX?

A PBX, or Private Branch Exchange, is a essentially a phone system controller. It allows you to set up phone numbers, users, and control how calls are handled in your organization. A hosted PBX means it is hosted in the cloud, so everything is done virtually instead of with physical phone lines and servers at your office. 

What is VoIP? 

VoIP (Voice over Internet Protocol) is a method of transmitting voice data over the internet rather than analog phone lines. Think of VoIP as the phone service that and all the services attached to them, including the ability to make and receive calls and record conversations.

What is a SIP Trunk?

You can think of SIP Trunking as a virtual connection between your PBX and your VoIP service, connecting the two like a cable line connecting a phone to the wall. Think of SIP trunking as a bridge between your PBX phone system and the VoIP service of your choice. 

So They All Work Together? 

That's right! As an example, let's look at a scenario many business owners are newly familiar with, Microsoft Teams: 

  • Teams is your Hosted PBX, where you control your numbers, agents, and call flows. 
  • Teams Calling Plans are Microsoft's default VoIP solution, the virtual phone service powering your Teams phone system. 
  • Teams Direct Routing is your SIP Trunk, allowing you to use your own chosen carriers instead of Microsoft's default service.

The Benefits SIP Trunking Provides Your PBX

When the VoIP service powering your PBX isn't cutting it, SIP trunking becomes invaluable. One of the most popular features in Microsoft Teams is their SIP trunking service, Direct Routing. The benefits of a SIP trunking feature like Direct Routing include: 

  • Global coverage. Companies with international presence will use SIP trunking to connect phone numbers that Microsoft can't provide into their Teams phone system. 
  • Cloud security. The overall security of a VoIP system is a top concern among contact center leaders and IT professionals. SIP trunking gives more ownership over your company's security measures. 
  • Reduced cost of ownership. Companies using Teams that also need to make international calls usually use Direct Routing to connect with their own international carriers. 
  • Call quality. Businesses with SIP trunks often see better call quality because the calls are running through dedicated lines. If a line failed, a failover response would redirect the call through a backup connection. This ensures quality is consistent for a golden customer experience.
  • International caller ID. Companies dialing calls internationally often notice issues with their outgoing caller ID, and that's due to underlying factors at the carrier level. With a SIP trunking feature like Direct Routing, businesses can connect Teams with services like TrueLocal®, ensuring your caller ID preferences when calling prospects. 

Setting Up SIP Trunking with Your PBX

Setting up PBX SIP trunking can do wonders for your call center operations - even in outbound calls! Access to advanced call features and coverage in hard-to-get regions helps businesses expand their reach and increase customer satisfaction. 

How to get it going depends on if you’re using a hosted PBX or a physical phone system:

SIP Trunking & Hosted PBX

Connecting SIP with a hosted PBX is simple if you're working with a reputable VoIP provider, so tons of technical expertise isn't required here. All that’s needed are IP-enabled phones or softphone licences, a strong internet connection, and a connection gateway (or a session border controller (SBC) for Microsoft Teams).

SIP Trunking & Physical Phone Systems 

The SIP setup process is largely the same as a hosted PBX, except the company is responsible for server configuration and maintenance with a physical phone system. It may require a bit more expertise and attention to detail in telephony infrastructure to get the technology set up the right way.

You see, it’s important to maintain your servers regularly as your SIP trunk relies heavily on its connective power. When linking your IP address with a physical phone system, the servers closest to you will generally provide you the most stable connection. If they’re down or out of sorts, it could negatively affect your call operations.

To connect traditional lines to a VoIP provider’s network, businesses must use a piece of hardware called a VoIP gateway. This device converts phone traffic into data packets used for transmission over the Internet, bridging together legacy phones and virtual resources. Say the traffic originates from an IP network, then the gateway device will decompress and decode the signal and channel it across the PSTN.

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  • Reliable global coverage. Access hard-to-get numbers from 170+ countries at affordable international rates. 
  • Intuitive cloud-based platform. Migrate to the cloud without expensive hardware or a team of engineers.
  • Superior international calling. Tap into AVOXI’s 20+ years of experience for reliable routing without complex configuration.
  • Certified SBC solution. AVOXI offers hosted SBC solutions, allowing direct routing customers to choose a component-based or fully-managed service.
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