Chapter 3: PBX Phone Systems in 2020

Your Go-To Guide for Understanding PBX Phone Systems and Their Benefits in 2020

pbx phone system diagram

This is chapter three of our Ultimate Guide to Small Business Phone Systems. In this chapter we’ll cover PBX phone systems—what they are and how your business could benefit from them. The two previous chapters cover multi-line phone systems and VoIP phone systems, and the next chapter covers Cloud phone systems.

What is PBX?

PBX, or private branch exchange, is a type of phone system that centralizes the task of switching phone lines and routing calls within an organization. Instead of phones connecting directly to the lines, the phones connect to the PBX system, which assigns calls to lines automatically.

In the past, PBX telephone systems were controlled manually by an operator—in a system known as PMBX, or private manual branch exchange. This is where scenes of a person plugging and moving wires on a switchboard come from. These days, the task of switching is automated, making telephone PBX systems much more convenient to use. These automated versions are called PABX phone systems. There are also IP PBX systems, which operate using the same principles but route calls over the internet rather than traditional phone lines.

The next few sections will cover some frequently asked questions about PBX phone systems, benefits and disadvantages, and a recommendation as to whether a PBX system is right for your needs.

What are the advantages of a PBX phone system?

The big advantage of a PBX phone system is that it centralizes the task of selecting a line for a call, rather than requiring each phone to have its own dedicated line. This allows for easier scalability and potential cost savings, since you only need enough lines to handle the maximum number of calls at any one time.

The number of lines needed in most businesses is less than the number of phones needed. In this system, adding a new phone is as easy as connecting the unit to the PBX system.

Another advantage of PBX phone systems is the ability to have a single main number for your business, with specific phones being identified by extensions rather than having their own unique phone numbers. This can greatly simplify the process of calling for customers, since they only need to remember or save a single phone number. It also gives off a more unified and professional appearance.

What is a PBX server?

pbx phone system ethernet cable

A PBX server is the brain of a PBX system. When a user makes a phone call, the PBX server determines how to route the call appropriately. There are two basic types of PBX servers—those for traditional PBX systems operating over phone lines, and those for IP PBX phone systems operating over the internet.

In both cases, the result is the same. The server routes the call through the appropriate channel to get the user connected. The difference is that a traditional system uses a switchboard and standard telephone lines, while the IP PBX system uses a computer server and an internet connection.

What is PBX hardware?

PBX hardware primarily consists of the telephone units, cables, and the switchboard itself, which is often housed in a cabinet. The switchboards can range from relatively small and compact units designed for small businesses to large, elaborate, and expensive commercial systems for large enterprises.

 An IP PBX system will have a computer server running the system rather than a switchboard and is usually more compact as a result.

PBX vs. VoIP

PBX refers to a type of phone switching and routing system that can operate over either a traditional landline or the internet. VoIP, on the other hand, is a combination of hardware and software that allows phone calls to be made over the internet rather than traditional phone lines.

VoIP systems are great for small businesses because they tend to be more cost-effective than traditional phone systems.

For those looking to combine the benefits of VoIP systems and PBX systems, an IP PBX can make for an excellent and robust small business phone solution. These systems use both VoIP technology and PBX technology to create greater scalability and software integration.

Similarly, a virtual PBX connects to the internet in such a way as to unify communications between different media. The virtual or internet connection can enable features such as visual voicemail, an auto attendant or IVR, or video conferencing.

Different Types of PBX

There are a few variations on PBX technology, allowing for customized solutions that can fit any business’s needs.

traditional phone system

IP PBX vs. Traditional PBX

An IP PBX is a VoIP system—that is, it sends voice signals over the internet rather than standard phone lines. A traditional PBX system uses those standard phone lines wired by the telephone company. IP PBX (aka PBX voice) tends to be a much more cost-efficient and flexible choice because it doesn’t require a lot of specialized equipment. 

The call routing is handled via a server, and the server doesn’t even need to be on site, which can make maintenance easier and save space, as well. VoIP services do not require a central office through which incoming calls come.

With voice over ip, the sound is transmitted through the internet through a VoIP gateway. This whole communication process, including all equipment, is handled through a voip service provider, which makes it easier for small and medium sized businesses to have access to advanced technology. Adtran Nevanta and other providers can help set up the network necessary to take advantage of such options.

Hosted PBX vs. SIP Trunking

Hosted PBX is an IP PBX system that is based off-site. It is maintained by a third-party service provider. SIP trunking refers to the process of connecting the IP PBX system to the Public Switched Telephone Network (PSTN) to allow for outbound dialing to non-IP phones.

If you have your PBX on-site rather than hosted, the SIP trunking system must be maintained by your business.

There are several advantages to a hosted PBX:

  • Lower Up-Front Costs—There’s no need to purchase and install on-site servers and connect the trunking service. All you’ll need, generally, are the IP phones and a steady broadband connection.
  • Easier Scalability—Hosted PBX systems are much easier to scale up than an on-site system. If you go on-site, you’ll be responsible for upgrading the hardware yourself, which means adding servers and configuring the system to accommodate more phones. This can be complex and often requires an IT professional.
  • Simpler Maintenance—An on-site PBX network setup will require your IT department to perform all the maintenance and upkeep. Host PBX providers handle all of this for you, so the only thing you need to worry about is adding users and maintaining your phones through an easy-to-use PBX software.

On-site PBX, on the other hand, allows you to have more control over your system by keeping it in-house. This can be a major advantage for some business owners, but you’ll have to weigh it against the advantages of hosting.

In the world of business telephony, key telephone systems, more commonly known simply as key systems, represent a simpler alternative to PBX systems. They don’t allow as many lines and don’t have as many automated features. Before VoIP and other virtual options existed, business owners would typically have to make a choice between these two different systems. Today, there are more advanced communications solutions that render these two traditional systems obsolete.

Should I buy a PBX system for my business?

small business owner on the phone

Traditional PBX phone systems can be expensive and difficult to scale, and as a result are best suited to larger businesses with the budget to accommodate them.

IP PBX, on the other hand, is generally more cost efficient, and the VoIP technology can be especially beneficial to small businesses that don’t have the budget for a traditional system. It is easy to scale and, if you go with a hosted PBX solution, almost maintenance-free. This makes IP PBX a perfect choice for small and medium businesses.