- A cloud PBX hosts the call-control software in a provider's data centre and delivers it over the internet, so there is no on-premises switch to buy, house or maintain.
- Cloud systems run over an internet protocol connection, which aligns with Openreach's all-IP migration completing in 2027 as the legacy copper network is withdrawn.
- Ofcom rules on number portability mean existing geographic numbers can usually be ported onto a cloud PBX when a business migrates from a traditional system.
- Capacity scales by adding or removing user licences in software rather than by installing extra line cards or hardware.
- Because calls travel over the internet, a cloud PBX has no mains-independent power of its own, so emergency and resilience planning differs from a copper line.
A cloud PBX is a business phone system whose call-control software runs in a provider's data centre and is delivered over the internet, replacing on-premises hardware with software licences that scale on demand.
Last reviewed: June 2026
What a cloud PBX is
A private branch exchange, or PBX, is the system that routes calls within an organisation and connects it to the outside telephone network. A cloud PBX takes that call-control function and runs it as software in a provider's data centre rather than on a box installed in a server room. Handsets, softphones and mobile apps register with the hosted platform over the internet, and the provider manages the underlying infrastructure, updates and capacity. The term is sometimes used interchangeably with hosted PBX or hosted voice, and the common thread is that the intelligence which decides where each call goes no longer lives on the customer's premises.
For the user the experience is similar to any modern phone system: extensions, transfers, hold, voicemail and call menus all work as expected. The difference sits behind the scenes, where the intelligence lives in the cloud and is reached over a broadband or dedicated internet connection. This model removes the need to buy and depreciate on-site switching hardware and shifts maintenance to the provider. Because the platform is shared across many customers and delivered as a service, capacity and resilience are the provider's concern, and the business consumes the capability much as it would any other cloud-based tool.
How it differs from traditional PBX and SIP trunks
A traditional PBX is a physical appliance on the customer's premises that the business owns and maintains, connected to external lines such as ISDN. A cloud PBX moves that appliance into the provider's network, so the customer rents the capability rather than owning the hardware. The everyday features are comparable, but responsibility for upgrades, patching and resilience shifts to the provider. With the legacy network being withdrawn as part of the all-IP migration, ISDN and similar circuits are being retired, which is one reason many businesses are reviewing on-premises systems that depend on those older connections.
SIP trunking is a related but distinct concept. A SIP trunk is the connection that carries calls between a phone system and the public network, and it can feed an on-premises PBX over IP. A cloud PBX, by contrast, is the phone system itself delivered as a hosted service, which usually includes the external connectivity within the package. A business may choose a cloud PBX to avoid running any switching hardware, or keep an on-premises PBX fed by a SIP trunk if it prefers to retain local control. The practical dividing line is ownership of the call-control software: with a SIP trunk the business still operates its own PBX, whereas with a cloud PBX that software is operated by the provider and reached over the internet.
Cloud PBX versus traditional PBX at a glance
The comparison below summarises the main practical differences between a cloud-hosted system and a traditional on-premises PBX across ownership, maintenance and scaling. Each row reflects a structural difference rather than a feature gap, since the day-to-day calling experience is broadly similar on both.
| Characteristic | Cloud PBX | Traditional PBX |
|---|---|---|
| Location of hardware | In the provider's data centre | On the customer's premises |
| Maintenance | Handled by the provider | Customer or installer responsibility |
| Cost profile | Recurring per-user subscription | Upfront hardware plus maintenance |
| Scaling | Add or remove licences in software | Install line cards or expansion modules |
| Remote working | Native via apps and softphones | Requires additional configuration |
Features a cloud PBX typically includes
Cloud platforms usually bundle the call-handling features that businesses expect, including call routing that directs inbound calls to the right team, interactive voice response menus that let callers self-select an option, hunt groups, and voicemail with delivery to email. Many also provide call recording, which businesses use for training and record-keeping. Where call recording captures personal data, organisations remain responsible for complying with data protection law set out in legislation.gov.uk and guidance published on GOV.UK. That responsibility covers telling callers a recording is being made where required, holding the recordings securely, and keeping them only as long as there is a lawful basis to do so.
Beyond the basics, hosted systems often add presence indicators, mobile and desktop apps, call queuing, reporting dashboards and integration with customer relationship management tools. Because the feature set is delivered in software, providers can roll out enhancements without an engineer visit, and administrators can usually reconfigure routing through a web portal rather than reprogramming on-site hardware. That portal-driven control is one of the most visible day-to-day differences: a change such as adding a new menu option, redirecting a queue or setting holiday opening hours can be made in minutes from a browser rather than booked as an engineering job.
The cost model
Cloud PBX pricing is typically a recurring per-user subscription, where each named user or extension carries a monthly licence fee that includes the platform and a defined feature tier. Call charges may be bundled into inclusive minute allowances or billed separately, and the underlying internet connectivity is a further consideration. This subscription model replaces the large upfront capital outlay associated with buying on-premises switching equipment. The shift moves spending from a one-off capital purchase that depreciates over years to a predictable operating cost that tracks the size of the workforce.
The trade-off is between predictable operating costs and ownership. A business avoids hardware depreciation and on-site maintenance but pays a continuing subscription for as long as it uses the service. Costs scale with user numbers, so a growing organisation pays more as it adds people, while a shrinking one can reduce licences. Exact figures depend on the feature tier, call volumes and connectivity, so quotes should be compared on a like-for-like basis. When comparing, it is worth confirming what each tier includes, whether handsets are rented or bought outright, and how call allowances are structured, because headline per-user prices can otherwise hide meaningful differences.
How it scales as a business grows
One of the defining strengths of a cloud PBX is elastic scaling. Adding a new starter is usually a matter of provisioning a licence and a handset or app login, which can be done in minutes through an administration portal. Opening a new site rarely requires new switching hardware, because the additional users simply register with the same hosted platform over their local internet connection. The same elasticity works in reverse, so a business that contracts or restructures can reduce licences rather than being left with surplus on-premises capacity it has already paid for.
This makes the model well suited to organisations with seasonal peaks, multiple locations or distributed teams. Because the system is reached over the internet, staff working from home or on the move use the same extensions and features as those in the office. Resilience and emergency call handling should still be planned for, as a cloud PBX depends on power and internet at each location and behaves differently from a self-powered copper line during an outage. Sensible planning includes confirming how emergency calls are routed and located, and considering a backup such as mobile failover so the business can still make and take calls if a site loses its internet connection.
Migrating numbers and connectivity
For most businesses, keeping existing telephone numbers is a non-negotiable part of any move, and number portability makes that possible. Ofcom's rules on porting mean a business can usually transfer its existing geographic numbers onto a cloud PBX when it migrates from a traditional system, so customers and printed materials are unaffected. The port is arranged as part of the switch, and the established number continues to ring through to the new platform once the migration completes.
Connectivity is the other half of the picture, because a cloud PBX is only as dependable as the internet link it runs over. Voice traffic is sensitive to delay and packet loss, so businesses commonly review whether their broadband or dedicated connection has enough capacity and consistent quality to carry calls alongside other traffic, and whether quality-of-service settings should prioritise voice. With ISDN and the wider copper network being withdrawn under the all-IP migration on the timeline Openreach has published for completion in 2027, assessing connectivity early gives a business time to upgrade the link if needed before the legacy lines it may still depend on are retired.
Frequently Asked Questions
What is a cloud PBX?
A cloud PBX is a business phone system whose call-control software runs in a provider's data centre and is delivered to users over the internet. It routes internal calls and connects the organisation to the public phone network without any on-premises switching hardware. Handsets, softphones and mobile apps register with the hosted platform remotely, and the provider manages the underlying infrastructure.
How does a cloud PBX differ from a traditional phone system?
A traditional system relies on a physical exchange installed at the customer's premises, while a cloud PBX moves that function into the provider's network. The customer rents the capability as a subscription rather than owning and maintaining hardware. Responsibility for upgrades, patching and resilience shifts to the provider, and remote working is supported natively through apps and softphones.
What features does a cloud PBX typically include?
Common features include call routing, interactive voice response menus, hunt groups, voicemail, call queuing and call recording, alongside mobile and desktop apps. Many platforms add reporting dashboards and integration with customer relationship management tools. Where recording captures personal data, the organisation remains responsible for complying with data protection law, including holding recordings securely and keeping them only as long as there is a lawful basis.
How much does cloud PBX cost?
Pricing is usually a recurring per-user subscription that includes the platform and a feature tier, with call charges either bundled into inclusive allowances or billed separately. There is no large upfront hardware purchase, but the subscription continues for as long as the service is used. Costs scale with the number of users and the chosen feature level, so quotes should be compared on a like-for-like basis.
Can I use existing phones with a cloud PBX?
Many IP handsets can be reconfigured to register with a cloud PBX, and softphone apps allow computers and mobiles to act as extensions. Older analogue or proprietary digital handsets may not be compatible and might need an adaptor or replacement. Confirming handset compatibility with the provider before migration avoids unexpected hardware costs and keeps the switch on schedule.
