PBX System

A PBX system is a type of phone system that receives and routes calls to a business. A PBX system is a location-specific type of switchboard, handling inbound and outbound calls.

Historically, the PBX system (PBX stands for Public Branch Exchange) was a tool for big-business enterprises, while smaller firms used key systems. As PBX systems became more affordable, small businesses also adopted PBX phone systems to handle and distribute their telephone traffic. PBX systems were more efficient than key systems, and were able to add functionality such as:

  • Line pools
  • Direct dialing
  • Voicemail

Today, advances in telephony and Internet technology offer businesses a new solution for small business telephone systems: VoIP (Voice over Internet Protocol) PBX phone systems.


Advantages of a VoIP PBX System

Where traditional PBX systems transmit calls as analog signals over a circuit-switched network, VoIP PBX phone systems transmit digital signals as data packets over the Internet.

VoIP telephone systems for small business offer many advantages over the traditional PBX phone system. The primary advantages of a VoIP PBX phone system are cost, scalability, and efficiency.


Using the Internet rather than the Public Switched Telephone Network (PSTN) for business telephone traffic can eliminate the need for a traditional phone carrier. Using a VoIP service provider instead of a phone utility can:

  • Lower a company's monthly phone bills
  • Yield more call control features
  • Offer greater flexibility and economy when adding lines

With a VoIP PBX, local calls are usually free, and long-distance can be free or extremely inexpensive, depending on the VoIP provider. (Some VoIP providers offer low per-minute rates, others provide allotted minutes with inexpensive per-minute overage charges. Still other VoIP providers offer unlimited domestic long-distance.)

International calls are also inexpensive (often less than .10¢ per minute), and some VoIP service provider plans allow free calls to landlines in select countries.

VoIP PBX systems for small business also offer cost-savings in call control features. With a traditional PBX system, advanced call controls are typically high-priced convenience features. Sometimes, adding additional services to a traditional PBX could not only incur charges for the service itself, but might also require expensive equipment upgrades just to accommodate it.

In contrast, many advanced telephony features are offered as standard (or inexpensive add-on) options to VoIP business PBX phone systems. Using a hosted VoIP PBX system also reduces the cost of software or hardware changes to the PBX, as they are borne by the hosting company.

Call control features of a VoIP PBX system can include:

  • Voicemail-to-email
  • Do not disturb
  • Extension dialing
  • Simultaneous ring
  • Call forwarding
  • 3-way calling
  • Outlook/browser integration (click-to-call)
  • Company directory

Companies using VoIP PBX for their business telephone systems can also benefit from consolidating their phone bills, especially if they have multiple locations, and the disaster recovery services that only come with digital, Internet phone service.

PBX Systems Have Scalability

VoIP PBX systems eliminate many of the complications of the traditional PBX. From size to basic functionality, the VoIP PBX system is simply easier to manage.

In a traditional PBX system, incorporating new call control features or adding lines typically involves changes to hardware, and can be difficult, laborious and expensive. A VoIP PBX system is much more flexible, allowing for quicker, easier accommodations to new features, lines, and extensions.

With a VoIP PBX, feature and system upgrades are often a matter of simple software changes. VoIP PBX telephone systems are more adept at handling the changing needs of a growing business economically and efficiently.

  • With traditional PBX systems, businesses are saddled with a large, cumbersome mechanical beast that occupies a significant chunk of office space. VoIP PBX systems have a much smaller on-site footprint.
    With a hosted VoIP, the PBX system is off-site altogether. Even if a company chooses to have an on-premises VoIP PBX, the amount of space the VoIP PBX occupies is comparatively minimal.
  • A traditional PBX is also an unruly mess of cords, including cabled cross-connects. To manage a traditional PBX requires not only space, but expertise: A company with a traditional PBX needs a dedicated employee to manage even routine actions, such as adding extensions, or hires an outside vendor, which can be expensive.
  • A VoIP PBX system makes the management of the company phone system easy. Much of the functionality of a VoIP PBX system can be accomplished easily through a web-based interface. A VoIP PBX system management interface also offers anywhere/anytime access.
  • A traditional, on-site PBX is expensive to maintain and expand. Adding lines and extensions can be problematic. Incorporating new features can be expensive in terms of labor, time, and actual service charges.
  • VoIP PBX systems are easily upgraded. Incorporating new features is typically accomplished via the web-based PBX system management interface. Extensions and lines no longer require advanced telephony skills and cross-connects, and can be expedited through SIP trunking.

PBX Systems Are Efficient

VoIP PBX business phone systems offer companies a level of efficiency beyond the reach of traditional analog PBX systems.

  • Using the Internet (or a local LAN or WAN internally) to process and distribute inbound and outbound calls translates into greater speed and reliability over traditional PSTN networks.
  • VoIP PBX telephone systems for small business offer a range of advanced call control features that would be unaffordable (or impossible) with a traditional PBX system, such as voicemail-to-email, voicemail transcription, call park, call queue, and more.
  • Hosted VoIP service providers eliminate the hassle and cost of on-site PBX systems, maintenance, and upgrades.
  • VoIP service providers offer data recovery services, guaranteed uptime, and routine backups.
  • Companies with multiple locations — especially nationwide — can eliminate the hassle of local utilities and consolidate phone bills.
  • VoIP PBX telephone systems make the provision and management of lines and extensions simple and fast.
  • Businesses can avoid the cost of toll numbers by using local numbers in multiple regions, states, or cities.
  • Call control features offered by VoIP PBX systems are convenient, productive, and professional, giving small businesses the opportunity to present a big-business image at a small-business price.
  • VoIP PBX systems can be managed using a web-based interface for convenient anywhere/any time access.
  • Features such as voicemail-to-email and call forward means that no call or message is missed if an employee is out of the office or not at her desk.
  • Adding or eliminating features on a VoIP PBX system is simple.
  • Many VoIP service providers offer conveniences such as no-contract service, or no minimum-term requirements.
  • VoIP phone systems allow companies to send everything (email, video, phone calls) as data.
VoIP-enabled phones

Types of PBX Systems

There are several general types of PBX systems for small business. Some offer standard features such as an automated attendant, 3-way calling, voicemail, and call waiting. Others offer a full range of options such as call park, music on hold, call blocking, and more.

  • PBX (Analog, or PABX)
    • Traditional PBX phone system (circuit-switched)
    • Private (managed by the customer)
    • On-premises
    • Needs a VoIP gateway (and/or SIP trunking) to work with Exchange Unified Messaging or a VoIP phone service provider.
  • Hosted PBX (Hosted VoIP)
    • VoIP services (packet-switched)
    • Call controls and other features
    • Hosted (equipment maintained by VoIP service provider)
    • Needs a VoIP adapter or VoIP gateway unless paired with VoIP phones
  • Virtual PBX
    • VoIP services (packet-switched)
    • Limited call controls
    • Hosted (equipment maintained by VoIP service provider)
    • Needs a VoIP adapter or VoIP gateway unless paired with VoIP phones
  • IP PBX
    • VoIP services (packet-switched)
    • Can use IP Phones (no analog to digital conversion)
    • Call controls and other features
    • On-site, can be managed by provider or by business
    • Ethernet connectivity -- no phone wires
    • Needs a VoIP adapter or VoIP gateway unless paired with VoIP phones
    • Hot desking supported
    • Integrates with user's computer
    • IP phone can be softphone on computer desktop

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