SIP Trunking vs Hosted VoIP: Which Should Your Business Choose? (2026)

Quick answer

SIP trunking replaces your ISDN or analogue lines with digital "lines" delivered over the internet into a phone system (PBX) you keep on your premises. Hosted VoIP replaces the phone system too, moving it into the provider's cloud so you rent it per user. The decision comes down to the PBX you already have. If it is under about five years old, does everything you need, supports SIP natively and someone maintains it, SIP trunking keeps it alive for less than replacing it. If it is older, out of support, missing features your team wants, or the reason you are reading this, hosted VoIP retires it along with the maintenance contract. Most UK small businesses end up on hosted; businesses with a recent, capable PBX or several hundred users are the natural SIP customers. Both survive the ISDN switch-off; neither requires you to change your numbers.

We sell both, which makes this guide franker than a hosted-only provider's or a PBX installer's. If you want the two options priced against your actual PBX and headcount, get a no-obligation quote.

What SIP trunking is

A SIP trunk is a connection from your PBX to a provider's network over the internet, carrying a set number of simultaneous calls. Where ISDN30 delivered thirty channels down a physical bearer, a SIP trunk delivers as many channels as you buy - five, ten, thirty - as data over your broadband or leased line. Your PBX sees them as lines; your staff notice nothing.

You keep the PBX, the handsets attached to it, its call flows, its voicemail and its maintenance contract. What changes is the line rental (cheaper), the flexibility (channels can be added in a day) and the resilience (calls can be re-routed if the site goes down, something ISDN never offered). If the PBX does not speak SIP natively, a gateway converts for it, which is an extra box and an extra cost.

What hosted VoIP is

Hosted VoIP, also called hosted telephony or a cloud phone system, moves the PBX itself into the provider's cloud. Users get IP desk phones, a desktop and mobile app or Microsoft Teams; call flows, voicemail, recording and reporting run on the hosted platform and are managed in a web portal. You pay per user per month, there is nothing on site to maintain, and features that would have been a PBX licence upgrade are included or a tier away.

Side by side

The cost question, honestly

SIP looks cheaper on a monthly comparison because channels cost less than seats and you already own the PBX. That is true and it is also incomplete. The PBX has a maintenance contract, it will need licences for new features, it will fail at some point and it will need replacing at the end of its life, at which point you buy a new PBX or move to hosted anyway. Hosted has none of those, but every user is a seat for as long as you use it.

Run the numbers over five years and the pattern is consistent. For a business of ten to fifty users with a PBX that is more than a few years old, hosted usually costs less in total once maintenance and eventual replacement are counted, and it delivers features SIP cannot. For a business with a recent PBX that does everything required, particularly a larger single site with many users sharing relatively few concurrent calls, SIP can be cheaper for the remaining life of that PBX. Our hosted vs on-premise total cost of ownership guide does the five-year sums, and what hosted telephony costs has the seat ranges.

The channel-to-user ratio

The technical reason SIP can be cheaper: a hundred office staff rarely make a hundred calls at once. A business might need fifteen channels for a hundred users, and fifteen channels cost far less than a hundred seats. Hosted providers know this and price seats accordingly, but for very large user counts with low concurrent-call needs, SIP's per-channel model has a real edge. Below about fifty users the effect is small enough that features and support usually decide.

When SIP trunking is the right answer

• Your PBX is under about five years old, supports SIP natively and does everything you need.
• You have specialist PBX features - a contact-centre module, specific integrations - that would be expensive to replicate.
• You have a large single site with many users and modest concurrent-call needs.
• You have a good PBX maintainer you trust.
• You need to survive the ISDN switch-off cheaply now and plan to revisit the phone system later.

When hosted VoIP is the right answer

• The PBX is ageing, out of support, or the reason your phones are unreliable.
• Staff work from home or across sites and need one number everywhere.
• You want call recording, analytics, Teams integration or CRM integration without a PBX upgrade project.
• You would rather have one provider responsible for the whole system.
• You are small enough that the seat cost is modest and the maintenance contract is not.

The middle path many businesses take

SIP now, hosted later. If the PBX is fine but ISDN is going, SIP trunks remove the switch-off deadline from the decision cheaply and quickly. When the PBX reaches end of life, the move to hosted is then a phone-system decision made on its merits rather than a forced one. The numbers port once more, which a good provider will handle as routinely as the first time.

What does not change either way

Your numbers. Both routes port your existing numbers, including DDI ranges, under Ofcom's rules - see number porting explained. Both depend on your internet connection being fit for voice, so both start with a line test. And both take you off the copper network before the PSTN and ISDN switch-off does it for you.

The bottom line

SIP trunking keeps a good PBX alive at lower cost than replacing it; hosted VoIP replaces the PBX and everything that comes with owning one. For most UK small and medium businesses hosted wins on total cost, features and simplicity; for businesses with a recent, capable PBX or a large site, SIP is a sound choice, at least until the PBX retires. The wrong answer is buying a new PBX with ISDN-era thinking in 2026.

We will tell you which applies to you before we quote either: get a no-obligation quote or call 0333 006 9399. How the assessment works is on our hosted telephony service page.

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