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Best PBX

If you're thinking about upgrading your business phone system, you're probably trying to determine the best PBX system to choose. That brings about its own set of issues: There's a lot of terminology involved, and there are a lot of PBX options to choose from. In order to select the best PBX system for your small business phone system, it first helps to understand what a PBX system is.

What Is a PBX? PBX stands for Public Branch Exchange. A PBX system is a complex set of hardware and software -- lots of blinking lights, cords, and cables -- that routes incoming calls to extensions. Remember those operator switchboards from old movies? Kind of like that, but without the operator. A PBX system is specific to a business or office location. It handles only the inbound and outbound telephone calls for that business. PBX systems allow direct dialing to extensions.


business VoIP network

PBX Systems for Small Business: An Evolution

For years, PBX systems were analog, expensive, and for big corporate players only. Small businesses had busy signals and receptionists who transferred your calls.

Small business telephone systems tended to use key systems. With key systems, each user at an extension could see and manage calls using lighted buttons on the phone. Key systems often required callers to choose a specific line to make external calls.

PBX systems for small business eventually became more accessible and affordable. Small businesses began hosting their own PBX systems.

Initially, a small business PBX system was still analog, or a PABX (Private Automatic Branch Exchange). Small business PBX systems were usually on-site, in a back room -- perhaps in an unused utility closet. Traditional PBX systems required space on-premises, and someone to manage the PBX system.

PBX systems for small business offered a lot of advantages over key systems:

  • No busy signals
  • Direct inward dialing (DID)
  • Extension-to-extension dialing
  • More internal lines and extensions available (SIP trunking)
  • Fewer outside lines needed
  • Voicemail
  • Automation
  • Lower charges for local phone service (circuit switching handled internally)
  • A next-available line "pool" rather than dedicated lines for each extension, or external calls
voip network

Modern PBX System Basics

Telephone systems for small business have evolved in the Internet age. Small business PBX systems are more efficient, have more features, and are more affordable than ever. Newer VoIP PBX phone systems offer even more benefits than the traditional PBX phone system, such as virtually unlimited scalability.

The major distinctions among the types of PBX systems for small business are:

  • Signal type
    • Analog
    • Digital
  • Transmission method
    • Circuit-switched
    • Packet-switched (VoIP)
  • Location and management
    • On-premises
    • Hosted

Circuit-switched means the signal is typically analog (electrical) and uses POTS (Plain Old Telephone Service) networks.

Packet-switched means the analog signal has been converted to a digital signal, compressed, and split into packets. These packets are sent over the Internet using VoIP (Voice over Internet Protocol).

Hosted PBX means that the company providing your PBX phone service houses and maintains all the hardware and software necessary. The calls are handled and routed to your business via the Internet using VoIP and packet-switching.

On-premises PBX means exactly what it sounds like: A VoIP PBX phone system sited at your business location. The responsibility for maintaining a premises-based PBX falls to the business.

Some PBX systems offer various combinations of these features. For instance, you could opt to create a hybrid system that uses a hosted VoIP PBX with a VoIP gateway and your existing analog phones. Or you might decide to have an on-premises PBX phone system, but opt to have it managed by a third party.

The possibilities are many. This makes finding the best PBX solution for your small business a challenge, but it also offers a lot of flexibility and room for growth. The best PBX system for your business depends on your budget, needs, and desired features.

traditional PBX hardware

Traditional PBX

A traditional PBX system is likely the PBX system you have now. Businesses with traditional PBX systems can depend on the proven reliability and call quality of POTS networks. As long as you don't need to expand beyond the limits of your current PBX system, your equipment investment costs are minimal, with the exception of maintenance.

An analog PBX can also be paired with a VoIP gateway (or SIP trunk) and VoIP service to create a hybrid PBX system, and to allow for unified communications.

Generally speaking, the shift in business telephony is to VoIP. Today, there are more disadvantages than advantages to a traditional PBX system. A traditional PBX system:

  • Takes up space on-site
  • Requires repairs and upgrades to be managed
  • Is limited in its scalability
  • Is slower (circuit-switching is slower than packet-switching)
  • Requires more outside lines
  • Is unable to receive voicemail or faxes to email without a VoIP gateway or SIP trunk
  • Requires more extensions
  • Costs more to make local and long-distance calls
  • Is incredibly expensive to upgrade to a new PABX phone system
  • Is unable to add remote extensions
  • Can't accommodate cell phones as extensions
  • Makes it difficult to add or move phones (requires cross-connects)
hosted pbx voip

Hosted PBX

Hosted PBX, or hosted VoIP, is a comprehensive VoIP solution. A hosted PBX offers many advantages as a business phone system.

Hosted PBX:

  • Offers a robust feature set, depending on the VoIP provider
  • Allows for unified messaging (voicemail and faxes can arrive in email)
  • Accommodates cell phones and remote extensions (check with the VoIP provider)
  • Is located, maintained, and monitored off-site
  • Eliminates the need for upgrades, patches, or repairs by the customer
  • Can be integrated with existing analog phone hardware with a VoIP adapter
  • Offers backup and disaster recovery options
  • Integrates voice and data
  • Can be managed online, from anywhere with an Internet connection
  • Is scalable
  • Costs less than traditional PBX in the long run (free or inexpensive local and long-distance, no maintenance or repair charges)
virtual pbx voip

Virtual PBX

Virtual PBX is a budget-friendly alternative to VoIP call routing. A virtual PBX offers many of the same benefits of a hosted PBX phone system -- flexibility, cost-savings, and adaptability. Like a hosted PBX system, a virtual PBX is hosted and maintained off-site.

However, a virtual PBX offers fewer business-centric convenience features, and may also only handle inbound calls. A virtual PBX is a business phone system for small offices with very few employees, or with a very tight budget. A virtual PBX is a very spare version of a hosted PBX.

The main way a virtual PBX differs from a hosted PBX is in the call controls offered. A virtual PBX typically:

  • Will offer only a limited number of extensions
  • May not offer voicemail-to-email
  • Won't include conference calling, or will charge an additional fee
  • May not integrate voice and data (no Internet fax service)
  • May not facilitate customizable answering rules
  • Will include a set amount of free minutes
  • Will charge overage fees per minute
  • May not include international long-distance coverage
  • Probably does not feature easy extension dialing

The features of a virtual PBX phone service offers vary widely by provider. As VoIP phone service becomes more affordable and more common, however, virtual PBX systems are including more and more call controls. For instance, Nextiva includes call screening, a toll-free or local number, and a dial-by-name directory.

A virtual PBX would probably be the best PBX system for companies with fewer than 10 employees, limited telephone traffic, and a tight budget.

ip pbx settings


An IP PBX is a complete, Internet-based solution for the small business telephone system. With an IP PBX, callers use IP phones to make phone or video (if supported) calls while connected directly to the VoIP network. An IP PBX integrates voice and data and transmits everything as data packets.

Small business telephone systems using an IP PBX transmit data either over the Internet or over the company's WAN or LAN.

An IP PBX is a purely digital PBX phone system when used with dedicated IP phones. An IP phone has various software elements built into it, such as stacks, clients, and codecs. Calls made on an IP phone produce a digital signal that is sent out over the Internet as data packets. With IP phones, the signal does not have to be converted by a VoIP adapter first.

Using an IP PBX may not eliminate the need for on-premises attention or space, but it does simplify things when compared to a traditional on-site PBX. An IP PBX can be configured and monitored by IT staff, and doesn't require the cross-connects a circuit-switched telephony network needs.

An IP PBX is also much smaller. The space an IP PBX takes up compared to a traditional PBX is negligible. Additionally, an IP PBX is much less complicated. Setting up an IP PBX is usually achieved by using a dedicated computer with the appropriate software and a PCI interface. Usually, a PoE (Power over Ethernet) switch, routers, and Ethernet cables are also needed to run an IP PBX phone system, as well as IP phones.

IP phones are plugged into Ethernet ports rather than phone jacks. In fact, using an IP PBX makes phone hardware unnecessary -- employees can use softphones installed on the computer instead.

IP PBX means:

  • Hosted and maintained on-premises
  • No SIP trunking necessary
  • No VoIP gateway required
  • Phones are hot pluggable
  • A wealth of call control features
  • Open source using SIP translates to greater flexibility
  • Unified messaging
  • Remote extensions
  • Integrates with the user's computer (click-to-dial, email IDs as caller IDs)
  • No phone wires -- uses Ethernet to connect to the Internet
  • IP phones retain the identity of the user (via the configuration) when moved from desk to desk
  • Web-based PBX system management
  • Voice over WiFi (VoWiFi) phones can be used
  • Can use a softphone rather than phone hardware

However, IP phones -- the primary advantage of using an IP PBX as opposed to a hosted PBX -- have their disadvantages, too. IP phones:

  • Can be expensive
  • Require a separate power source or a PoE switch
  • Can affect bandwidth consumption
  • Are vulnerable to network attacks
  • Without QoS features, call quality can be affected by Internet congestion
  • Do not work well on high-latency Internet connections (satellite Internet, edge networks)
  • Are affected by non-standard (proprietary) codecs (create compatibility issues and complicate communications)

An IP PBX can also be used with an analog business phone system if VoIP adapters or a VoIP gateway are incorporated. Using a VoIP adapter or gateway cuts down on costs (no new phone hardware) and converts the analog signal to a digital signal for packet transmission. However, using analog phones with an IP PBX also eliminates many of the advantages of an IP PBX system, such as hot desking and Ethernet connectivity.

An IP PBX might be the best PBX solution for your company if you're looking to replace your current key or analog PBX system with a comprehensive, fully-featured IP telephony system.

ip phone

Final Thoughts on PBX Phone Systems

One more alternative for businesses is a managed PBX. Managed PBX is another option for traditional or VoIP PBX users: The PBX can be located on-site and managed remotely by a third-party. For VoIP PBX clients who wish to pursue a managed PBX system, the best PBX solution might be to use a local VoIP provider. A local VoIP provider would be able to respond quicker to issues requiring on-site attention.

So how do I choose the best PBX system?

Which PBX phone system is the best PBX phone system? With all the call control features available, and the different PBX options, it can be hard to choose a business phone system. The best PBX system takes into account all your communications and budget needs. There are benefits to each type.

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