PBX: What Is It & Why Does It Matter?

Jordan Steinberg
Sep 4, 2017

What Is a PBX?

Private Branch Exchange (PBX), is a telephony system that manages communication within a company. Since companies typically have a limited number of private external lines, a PBX automatically switches calls between all employees to ensure equal sharing amongst all active employees.

What Is the Purpose of a PBX?

A PBX phone system is used to manage the private telephone networks within companies and organizations. Depending on whether a given system is on-premise or hosted, features may include the following:

  • Unlimited Users
  • Free Internet Calling
  • Salesforce Integration
  • Voice Mailboxes
  • Voicemail-to-email
  • Conference Suites
  • Automatic Call Distribution

PBX for Analog vs VoIP

In the past, manual switchboards were used to facilitate traditional analog telephone calls. Corporations would have a limited number of internal lines sourced from the telephone company, and would need to hire people to ensure that employees had their calls properly directly.

Though the original PBX systems did away with the requirement for human management, they still required a whole room or closet to house all the necessary technology. Oftentimes, modern on-premise PBX systems still require such storage spaces, as they are connected by way of Local Area Networks (LAN).

VoIP became possible through IP PBX, which, due to SIP trunking, allowed business phone systems to begin operating by way of the internet. Compared to traditional landline calls, VoIP offered such features as high definition audio, call queueing, flexible business hours, and application integration.


Hosted vs On-Premise PBX for VoIP

A PBX system can come in two forms, on-premise and hosted. Through the use of analog hardware, on-premise PBX engages its processes via traditional analog means. Meanwhile, hosted PBX functions are facilitated by way of the cloud.

In the context of VoIP, on-premise PBX connects users through broadband internet connections. This connection to the internet is what allows for voice calls to be made by virtue of the web. Moreover, this function is made possible via SIP trunking, a purchasable service that assists business phone systems in operating with the aid of internet-based channels.

While still commonly used in the corporate world, on-premise PBX is neither expandable, nor upgradeable. Furthermore, as the physical hardware ages, replacement and maintenance costs must be dealt with.

Hosted PBX, on the other hand, is entirely digital. With no physical devices to maintain or install, a purchasing company can expect an elimination of the hassles associated with maintenance and upgrading. Also, SIP trunking processes are handled directly by the service provider, rather than through a third-party provider.

PBX systems form the crux of what business phone networks are meant to achieve. They streamline communication procedures, which can facilitate expansion in turn. Through the use of a hosted PBX system, employees and phones that would otherwise be separated by hundreds or thousands of miles can be brought together. Moreover, as hosted PBX has gained in popularity, its scalable nature ensures that certain enterprises become future-proof. In the event that this brand of innovation is of relevance, then our breakdown of the 10 best business phone system providers could be a fantastic resource.