Cloud Based Phone Systems

Cloud based phone systems for your business explained

25 November 2020

Gone are the days when businesses needed to host their business phone system on-premises. Today’s businesses can use cloud-based phone systems, which dramatically lower the upfront costs necessary with a business phone system.


So how do cloud-based phone systems work, and how are they different from the traditional phone systems of the past? This blog aims to answer those questions and explain the distinct advantages of cloud phone systems.

What is a cloud business phone system?

Cloud-based phone systems (also known as hosted PBX), as its name suggests, host all the servers and software in the cloud. This differs from a traditional PBX (private branch exchange) hosted on-premises. A third-party service provider (like Business Telecom) maintains the servers and software, and all data is stored on the cloud too.


Cloud phone systems don’t operate differently than a traditional PBX and use Voice over Internet Protocol (VoIP) to place and receive calls. You can still use a standard desk phone with a special adapter or any compatible IP phone with cloud phone systems. However, they also offer more advanced functionality like mobile device integration and advanced collaborative tools that may be prohibitively expensive or unavailable with a traditional system.

What are the differences between cloud phone systems and traditional phone systems?

Cloud phone systems offer some key advantages over traditional phone systems. One of the most significant differences is cost. The PBX is one of the most expensive parts of a business phone system, and remotely hosting it cuts out that overhead. But that’s not the only savings.


It’s far cheaper to route calls over VoIP, which is why many providers offer features like unlimited calls, in some cases including international calling. But with the build-out of the NBN across Australia, traditional copper lines are being phased out. Nearly all landline calls and data in Oz will travel through the NBN within the next few years.


Businesses across the country must decide whether to host their phone systems locally or choose a cloud phone service. We think the latter option is best for small and medium-sized businesses, which might not otherwise be able to afford an onsite PBX solution.


Another advantage is the capability to choose any provider you’d like. You might be limited to carriers that service your area with traditional systems. With cloud-based phone systems, you only need a broadband internet connection and a compatible phone or adapter for your cloud phone service of choice.


Installation is another significant difference. The hard part of any phone system installation is always the PBX hardware and software. With cloud phone systems, much of the installation is spent on the phones, which installers can set up in minutes.

How a cloud business phone system works

Since cloud-based phone services are delivered over a broadband internet connection, a voice signal must be encoded into a data stream.


Here’s how it happens:


  • A user picks up the receiver and places a call. The phone starts the call by sending the call to the cloud PBX, which routes the call.
  • During the call, the voice signal is converted into data packets, then sent to the PBX, which sends it to the destination receiver, where it is converted back from data to a voice signal.
  • Phone calls can be placed from VoIP phone to VoIP phone or landline. In the case of VoIP to VoIP calls, call quality is often far superior to a traditional phone call.


This process is similar to how a traditional PBX system works, but in that case, the call is routed to the onsite server and sent over the phone network from that location rather than from the cloud.

Important Things to Consider

As we said earlier, the NBN will eventually force nearly every Australian business to decide which business phone solution they’d like. So how do you know if cloud-based phone systems are right for your business?


You must have reliable and fast broadband for a cloud business phone system to work well. The NBN is fibre-based, offering more than enough bandwidth with hosted PBX solutions. However, if you have a slower connection, such as DSL, you may be limited to a traditional phone system unless you have alternative access to NBN-like broadband speeds.


With a cloud-based phone system, it’s also important to check with your provider to ensure they can offer you alternative methods to stay connected in the event of any outage. Business Telecom can help you select a setup if you’re concerned about losing connectivity. We also have some of the best uptime percentages of any VoIP provider and strive to inform our customers of planned outages well in advance to limit business disruption.

Why is a cloud phone system better?

Cloud-based phone systems offer more functionality than legacy phone systems do. While you’ll get the standard features such as Caller ID, conference calling, multi-line support, and call recording, the advanced functionality of cloud phone systems enhances collaboration across your organisation without the need for costly PBX hardware.


Since the server is hosted in the cloud, your service provider can add new functionality at no additional cost. Enhanced features include access to your office phone through an app on your mobile phone, far easier relocation, and advanced collaborative features like videoconferencing, virtual whiteboards, meeting spaces, and more. Those updates can be pretty expensive for premise-based systems.


Another advantage is the price. Traditional phone systems are typically too expensive for small businesses, but cloud-based phones bring unified communications features to businesses that might otherwise be unable to afford them.

Who should consider a cloud phone system?

Many businesses will find moving to a cloud phone system could be beneficial. We’ve come up with a few scenarios below.


  • Onsite PBX systems require a team of IT staff with experience in phone systems to maintain and upgrade hardware and software. With a cloud-based system, your provider handles that.
  • Businesses operating across multiple sites will require an onsite PBX at every location. Cloud phone systems allow every satellite office to use the same cloud-based PBX.
  • Cloud-based phone systems are perfect for less traditional workplace situations. Startups will find cloud phone systems useful for their scalability. Businesses that have transitioned to remote work or don’t need a conventional office space are also great candidates for cloud-based business phone systems.


A cloud phone system’s goal is to make maintaining a phone system easier while offering advanced calling features and saving money. And with the NBN arriving across Australia, now’s the time to decide whether moving your phone system to the cloud makes sense for your business.

Ready to move to the cloud?

Our experts at Business Telecom are ready to work with you today on the best cloud-based phone system for your business needs. With unrivalled uptime and the best VoIP phones from our partners Cisco, Avaya, and Panasonic, we’ll be able to find a cloud-based option that both is affordable and ready for the future of business communications.


We’d love to hear from you! Get in touch with us today to get started.