Virtual PBX systems or hosted PBX systems deliver PBX functionality as a service, available over the public switched telephone network (PSTN) or the Internet. Hosted PBXs are typically provided by a telephone company or service provider, using equipment located in the premises of a telephone exchange or the provider's data center. This means the customer does not need to buy or install PBX equipment. Generally the service is provided by a lease agreement and the provider can, in some configurations, use the same switching equipment to service multiple hosted PBX customers.
The first hosted PBX services were feature-rich compared to most premise-based systems of the time. Some PBX functions, such as follow-me calling, appeared in a hosted service before they became available in hardware PBX equipment. Since introduction, updates and new offerings have moved feature sets in both directions. It is possible to get hosted PBX services that include feature sets from minimal functionality to advanced feature combinations.
In addition to the features available from premises-based PBX systems, hosted-PBX:
Hosted PBX allows a single number to be presented for the entire company, despite its being geographically distributed. A company could even choose to have no premises, with workers connected from home using their domestic telephones but receiving the same features as any PBX user.
Allows multimodal access, where employees access the network via a variety of telecommunications systems, including POTS, ISDN, cellular phones, and VOIP. This allows one extension to ring in multiple locations (either concurrently or sequentially).
Allows scalability so that a larger system is not needed if new employees are hired, and so that resources are not wasted if the number of employees is reduced.
Eliminates the need for companies to manage or pay for on-site hardware maintenance.
Supports integration with custom toll plans (that allow intra company calls, even from private premises, to be dialed at a cheaper rate) and integrated billing and accounting (where calls made on a private line but on the company's behalf are billed centrally to the company).
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