PSTN, ISDN, & Hosted PBX: What’s the difference? - Alltel Archive

PSTN, ISDN, & Hosted PBX: What’s the difference?

PSTN, ISDN, & Hosted PBX: What’s the difference?
A telephone system is one of the first technologies that a business owner invests in during the start-up phase. With an assortment of solutions out there, choosing the right one for your specific needs can be overwhelming. We understand that not everyone is tech-savvy, so we’ll breakdown the three most common types of business communication systems for start-ups.


Public Switched Telephone Network, more popularly known as PSTN, is a type of phone system that carries analog voice data through electronically switched networks. This is your typical landline phone connected by copper lines. As a dedicated service, the line cannot be used for any other purpose while on a call. One phone number is equivalent to one phone line.


Integrated Services Digital Network, also known as ISDN, is a type of telephone system that carries both voice and data in digital format (bits) rather than waves. This system uses the same circuit-switched networks as PSTN. It is comprised of bearer channels (B) which prompts user to user connections, and a signaling channel (D) for user to network communication. There are 2 forms of ISDN service, Basic Rate (2B+1D) and Primary Rate (30 B+D). The bearer channels carry calls concurrently, while the signalling channel sets up the calls and rings the other party. Imagine the line being a freeway and digital packets as cars. Multiple cars can use one freeway at one time, carrying simultaneous conversations with them.

Hosted PBX

Hosted Public Branch of Exchange, otherwise known as Hosted PBX follows the same idea of handling internal calls locally, except a third-party host runs the system. The host, in this case the service provider, shoulders the responsibility of owning, operating, securing, and maintaining necessary hardware for the complicated system. Unlike the first two which run of switched systems, the service runs on the provider’s servers and is delivered to end-users through the Internet.  

To understand these three better, let’s take a look at them side by side.






Hosted PBX

INSTALLATION Uses established switched network infrastructure. Uses established switched network infrastructure. Service runs on the provider’s servers and is delivered through the Internet making installation hassle-free.
Cabling & maintenance costs can be expensive for multiple lines. May require installation & maintenance of extension wiring to devices.
CALL CAPACITY Lines are dedicated for one use at a time. One number per line. Concurrent connections of combined voice & data delivered over a single line Unlimited number of simultaneous call capacities w/o the need to install any lines.
DATA TRANSMISSION Low bandwidth utilization. Higher bandwidth utilization compared to PSTN. High transmission & bandwidth utilization through packet-switched data
EASE OF CUSTOMIZATION Can be equipped with limited call features. Maximum of 8 devices can be attached per line. Highly customizable—features can be added online
Analog devices may need a terminal adapter Analog devices may need a terminal adapter
RELIABILITY Hardwired landlines still work during power outages. Requires a local power supply and backup power during power outages. Powered using PoE (Power over Ethernet)– no need for a separate power supply.
Average downtime totals 5 minutes a year Provides crystal clear digital voice calls Sound quality is dependent on a strong connection.
IMPACT ON BUSINESS OPERATIONS Used for EFTPOS machines, elevator lines, alarm systems, and ADSL connections. 10x faster than an analog system- eliminates the need for multiple lines. IT responsibility is removed from the users and placed on the provider.
Recommended for guaranteed business continuity. Requires 1 analog line for business continuity. Encourages collaboration between multiple sites.
PORTABILITY No mobile capabilities. Recommended for on-site operations. No mobile capabilities. Recommended for on-site operations. Softphones and desk phones can be used in any location w/ a strong connection
SCALABILITY Limited scalability. Add numbers as by purchasing additional blocks of DIDs. Lines can be increased or reduced w/o installation.
WHO IS IT FOR? Ideal for small businesses that require only 1-2 lines. Ideal for businesses that require 2 to 8 lines. Small to large businesses with a traveling sales force.
Businesses w/ minimal local & long distance communication needs. Businesses that require low-latency and high quality calls. Businesses that have long-distance communication needs.
Businesses that have geographically-dispersed sites.

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