With most industries moving to a purely digital business infrastructure, it’s hard to imagine anyone still using physical phones. However, physical phones are still a viable means of communication that is secure, efficient, and effective at keeping everyone in your company in the loop.

But having physical phones means having physical telephone lines running in and out of your office, which tend to create an unsightly clutter of wires. To manage this, and to leverage the power of the internet, many businesses still use PBX systems.

What is PBX?

PBX stands for Private Branch Exchange and is the most common telecommunications system in most businesses. PBX allows companies to make and take inbound and outbound calls, set up voice mail, reroute calls between phone units, and many more call management features. It’s mostly used to switch calls between a telephone network and an office.

The great thing about PBX is that it allows a large amount of calls to be routed through a small number of physical telephone lines. In ye olden times, human telephone operators would have to manually plug swires to make and complete calls. With PBX, this system is automated, computer-controlled, and so much more effective. Some PBX systems, like the ones for small offices, also have interactive voice responses, or IVR. An IVR is a great way to reduce the amount of people answering customer queries, provide automated replies to common issues, and can be modified to suit a business’ needs.

Other features include making calls over VoIP (Voice over IP), ISDN, on-hold music or messages, and, depending on your provider, find-me-follow-me services for companies with mobile employees.

A PBX system works via a PBX board. In the infancy of telephony services, the PBX board would a large, exposed wire panel with sockets for connectors. When people picked up the phone, a human operator would answer and would ask them who or where they wanted to be connected to. The operator would then connect that call to their intended receiver by physically taking a cable and connecting it to a socket. This worked for smaller communities, but as cities expanded and populations boomed, a more efficient system was required. Over the years, the PBX transformed from a bulky, messy, and overall inefficient, tangle of wires and people and condensed into a circuit board that fits into a single server rack slot.

The PBX switch board is a complex computer that routes, reroutes, evaluates communication paths, and connects calls to their receivers, and it does all of that in a matter of milliseconds even with limited bandwidth.

Different Types

PBX systems come in 4 different types, each one defined by where they’re located in relation to the user, and its primary function.

PBX systems can be operated either on-site or offsite. On-site PBX is a PBX system that is operated from within the business location. Offsite, on the other hand, is a PBX system that’s operated outside the business premises, either in a separate office or in a PBX management site. A PBX system can use either internet protocol services or by traditional means via analog and/or digital phone lines.

These are the four main types of PBX, which are separated into two sub-categories:

Traditional PBX

  • On-premise PBX, which are located within a business location and uses either an analog or digital system
  • Hosted Traditional PBX, which are located in a location separate from the main business and uses either an analog or digital system

IP-Based PBX

  • On-Premise IP PBX which are located within a business location/office and uses either an analog or digital system
  • Hosted IP PBX which are located in a location separate from the main business and uses either an analog or digital system


What Makes Them Different

Both types of PBX systems have their own benefits and flaws for an office, but when choosing a PBX for your business, the most important considerations you should be looking into are communication type and location.

Offsite vs. Onsite

With onsite or on-premise PBX systems, businesses have direct and complete control over their telephony system. This means that all changes to the PBX, whether it’s adding, changing, or decreasing lines, or even just basic maintenance, are handled by an in-house team of IT professionals. While this allows you to modify your PBX as much as you would like, maintaining a whole IT department can be a bit expensive, especially for small businesses.

Offsite or Hosted PBX, on the other hand, transfers all responsibility of control, modification, and maintenance to a service provider located off the business’ premises. This means that your business will have less control over your PBX, but most responsibilities of handling the system are relegated to a third-party provider, which means that you don’t need to maintain a whole team of IT professionals.

Analog/Digital Vs. Internet Protocol(IP) vs. Digital/Analog

Analog systems use traditional wiring and are generally distinct from a company’s computer networking hardware. IP-based systems are integrated into the same networking systems used for sending and receiving e-mail, web browsing, and other online functions. Traditionally-wired systems sometimes had fewer call-quality concerns than early IP-based systems – though modern ones on strong networks have greatly improved. Using IP-based systems often allows a company to have all its communication needs handled by one provider, simplifying billing and support concerns.

Analog/digital PBX are systems that use traditional wiring, often connected to the Public Switched Telephone Network, or PSTN, and is separate from a business’ internet infrastructure. Basically, the analog/digital PBX is traditional telephony. It doesn’t offer a lot of new services, but it gets people connected, superb call quality, and is, more often than not, the more reliable system.

IP PBX, on the other hand, is a system that is integrated into the internet infrastructure of a business. IP PBX offers a range of other services, like VoIP or IVR’s, and because it’s part of the business internet, all billing, customer support, and maintenance can be handled by a single provider. However, call quality is not the best (although networks with very fast internet have seen major improvements).

As with any kind of office process, always do your research to find out exactly what type of PBX will effectively address your business needs.