A traditional PBX system uses traditional phone lines, while a VoIP system uses the internet to send and receive phone calls. VoIP phone service is widely used today, although one drawback is that a VoIP connection depends on an internet connection to handle the bandwidth. Modern offerings, such as IP PBX systems, provide almost unlimited growth in terms of extensions and trunks. IP PBX introduces more complex functions — such as ring groups, queues, digital receptionists, voicemail and reporting — that are more costly and difficult to implement with a traditional PBX.
Price and company size are deciding factors as to which telephony option to choose. Larger companies may look for new technology and special features and make purchases based on future needs; often, these expenditures are spread out among 40 or 80 users. However, a small company may look mainly at costs, which will be substantially lower for digital phones connected to its already-in-place on-premises telephone lines. If new cables need to be installed and the local area network (LAN) is not VoIP-ready, costs will be higher. Some small offices or retailers may need just three, 10 or 15 phones and are operating with traditional copper phone lines, rather than a Primary Rate Interface (PRI) circuit. So, these establishments may limit their selection of a new phone system to either an over the open internet VoIP service (hosted business VoIP) or a small new digital system because the upfront cost per phone can be significant when getting an in-house IP PBX.