PBX Phone Systems

By Aimee Bradshaw | Writer and researcher | Published: 28 January 2014

This article will give you an overview of PBX telephone systems, outlining the various options available and how each could help your business increase productivity, function more efficiently and save money.

What Is a PBX System?
Choosing the Right PBX System for Your Business
Traditional PBX
Virtual PBX
Hosted PBX

What Is a PBX Phone System?

PBX stands for Private Branch Exchange and refers to a telephone system that manages incoming and outgoing calls for business users. By allowing all of the organization's users to share connections to a smaller number of external phone lines the main purpose of a PBX is to save money as a separate line for each user is no longer required.

An additional benefit of modern IP PBXs (more on these below) is the range of advanced call management features that SMEs and large organizations can take advantage of to increase both efficiency and productivity in their communications and overall workload. Some of the key features are: Auto Attendant, Call Forwarding, Call Transfer, Conference Call and Interactive Voice Response (IVR).

A PBX system is made up of a number of parts:

  • A computer server that manages the call switching both for internal calls within the company and for incoming or outgoing calls between the organization and outside callers
  • Telephone trunk lines (a trunk is a bundle of multiple lines) that connect the PBX to the external phone network (the PSTN, or Public Switched Telephone Network)
  • The network of internal PBX lines within the company
  • Traditional analogue PBXs included a switchboard where a human operator could direct calls; nowadays, this role is typically undertaken by an automated voice service, sometimes called an Auto Attendant or virtual receptionist. Some organization's PBX systems may instead use an Interactive Voice Response (IVR) feature: this allows external callers to select which line or department to be routed to by pressing the appropriate numbers on their keypad.

A visual representation of a PBX system:

PBX phone System

PABX and EPABX are alternative abbreviations that may be used to refer to private branch exchange systems. They stand for private automatic branch exchange and electronic private automatic branch exchange, however as almost all private branch exchanges today are automatic the abbreviation PBX is usually used to refer to these types of systems as well.

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Choosing a PBX Phone System For Your Business

With the gradual shift towards digital, IP-enabled PBXs, there are several options in terms of the type of PBX phone system you implement for your business.

When selecting a modern IP PBX, the primary choice essentially comes down to where the PBX is physically located – whether it is located on your company’s premises or whether it is hosted by your VoIP service provider in the cloud .i.e on one of their own servers.

Which system is best for businesses of any size will depend on their specific telecoms needs and budget as each type of PBX has its particular benefits. Below we cover in detail the different types of PBX systems available and outline core features and advantages of each.

Traditional PBX

Traditional PBX Phone Systems

Traditional PBX Features

Traditional PBX is connected to your outside line or lines with your telephones then connected to the PBX. When a call is placed or received traditional PBX phone systems automatically connect the correct extension to the correct outside line.

There are a number of benefits to a traditional PBX with reliability being the main one. A traditional PBX will remain operational even if your computer network or Internet goes down and although these older systems are not as flexible or feature-packed, they do one thing very well: sending calls from one point to another. The main reason for this is because analogue PBXs were designed to be completely self-contained, fully controlled (and relatively closed) systems.

Another benefit to traditional PBX is that there is no need for new network infrastructure. This is particularly applicable for traditional businesses that haven’t previously needed significant web presence and the necessary Ethernet network cabling on their premises. If this is the case it may not be cost-effective to invest immediately in IP phones that require this type of infrastructural wiring to function. In these scenarios, analogue phones and a traditional PBX may be the most suitable option.

Although plenty of businesses and corporations do still use legacy analogue PBX systems while they still can, many are moving to either a hybrid model (using PBXs that incorporate both analogue and VoIP connections) or are moving their communications completely into the virtual domain with fully hosted cloud services.

What type of business is traditional PBX most suitable for?

Traditional PBX Business Size

With the advances in technology within the telecoms industry there are now more suitable alternative PBX phone systems for all size of businesses. Even those looking to upgrade outdated systems, whether small, medium or large would be advised to invest in one of the other three options covered in more detail below.

Traditional PBX Price Overview

Calculating the cost of a traditional PBX phone system can be a complicated issue. As already mentioned there are a number of variables that depend on the size of the system you need which often involve the size of your business and number of users you have on the system.

Another issue with traditional PBX systems is the up front costs that must be factored in for purchasing and installation of vital equipment and technology and it is usually for this reason that IP, Virtual and Hosted PBX systems are now favored by business owners.


IP PBX Phone Systems

IP PBX Features

With the advent of VoIP or Voice over Internet Protocol, voice data no longer has to be transmitted down dedicated phone lines but can be transferred over TCP IP networks i.e. the very same digital networks that handle Internet data.

An IP PBX, which stands for Internet Protocol Private Branch Exchange, is a PBX system that switches and manages calls using VoIP technology rather than traditional phone lines i.e. utilising the IP data network. A typical IP PBX can also switch calls between VoIP users and traditional telephones, and still connect two traditional telephones in the same way as conventional PBXs do. It is this capability which leads to it sometimes being referred to as hybrid PBX, IP PBXs that have both on premise and cloud components.

A significant advantage of an IP PBX, and VoIP in general, is that it converges voice data and other Internet data (including Instant Messaging, email and web browsing) onto the same network. The upshot is that Internet access, VoIP communications and even connections to traditional telephones are all handled by a single network connection to each user: it’s flexible, allowing your business to grow and new users to be added with minimal disruption, and it vastly reduces longer-term operation and maintenance costs.

What type of business is an IP PBX most suitable for?

IP PBX Business Size

The stability of an IP PBX system means it can easily handle a large number of phone lines and extensions making the system ideal for any size of business with a growth strategy in place. IP-PBX systems are easy to install and configure and can be installed by anyone with a degree of proficiency in setting up networks.

Once installed, the system is easy to scale up or down in size as required without the need to invest in expensive and bulky hardware. In fact, hardware can be cut down significantly as, if the phones are installed on the user's PC, then the need for handsets and wiring is eliminated.

IP PBX Price Overview

IP PBX systems give companies the same features that can be found on a traditional PBX system but with the added cost savings that can be achieved using VoIP-based services. One of the major reasons to switch to an IP PBX telephone system for your business is the cost savings you can achieve.

If you have a number of sites, by using this type of PBX system calls between branches or offices can be completely free. If you make a large number of international or long distance calls using the internet for these is also significantly cheaper than using a regular phone network.

Virtual PBX

Virtual PBX Phone Systems

Virtual PBX Features

A virtual PBX system, also known as cloud PBX essentially offers the same service as an IP private branch exchange though it can also provide even more comprehensive feature sets and enhanced integration with other software platforms.

Virtual PBX is located and maintained entirely off-site by the provider on their own computer servers meaning there is no hardware that the user must buy or install.

As the changeover from analogue telephony to VoIP accelerates two related PBX trends have emerged:

  • The elimination of hardware – on premise hardware is gradually becoming a thing of the past as platforms and services are delivered directly from the cloud by the provider
  • The transformation of IP communications to be more application-oriented – the modern cloud PBX has effectively become an app, delivered as a subscription service rather than a tangible piece of hardware equipment.

It’s important to note that a cloud PBX can also still support a hybrid phone system model, meaning you can still use your older analogue phones fitted with analogue terminal adapters (ATAs).

A PBX with VoIP allows other apps to interact with it on the same platform. A cloud-based PBX takes this enhanced functionality even further, offering expanded office space by removing the need for on premise hardware and infrastructure, businesses now only have to worry about the space for desk phones and VoIP handsets.

▶ Read more: Best Office Phone Systems 2020 Roundup

What type of business is Virtual PBX most suitable for?

Virtual PBX Business Size

Similar to the IP alternative virtual PBX systems offer an unlimited number of extensions which is a real asset for rapidly growing businesses. A virtual PBX system is also completely customizable allowing your business to create a bespoke system to match the needs of your organization using a comparatively low cost system. As cloud PBX systems are software based, it is easy to add further functionality as your business develops and your needs change.

Virtual PBX Price Overview

VoIP over IP PBX or hosted PBX can save businesses a lot of money. Virtual PBX Systems allow you reduce the need for on-site hardware and means maintenance and hosting can be handled externally.

Call logs also ensure managing your organization’s phone use is quick and easy. Detailed logging of all aspects of phone system use within the company also allows administration to run reports on how the PBX system is being used, whether it's continuing to meet the needs of the business and where costs can be reduced.

The cost of international calls is also greatly reduced and streaming media opens up a range of possibilities in the form of voice/video conferencing and desktop sharing applications.

Hosted PBX

Hosted PBX Phone Systems

Hosted PBX Features

In many ways similar to Virtual and Cloud PBX systems, there are a number of differences with a hosted system. This type of PBX system is far more feature rich with hosted solutions working on the basis that larger scaled technology, such as IP PBX, is hosted in a virtual environment and then sold off as a subscription based service, or in this case, platform.

Although a virtual PBX system supports a hybrid phone structure, of analogue and traditional PBX with VoIP capabilities, a hosted PBX system would usually be installed to replace an existing phone system with a complete switch to IP phones taking place.

It is not uncommon for a business with an existing virtual PBX system to upgrade to a hosted system as they continue to grow, particularly those that are expanding across a number of geographical locations with this type of PBX helping to lower overall costs.

What type of business is Hosted PBX most suitable for?

Hosted PBX Business Size

As a Hosted PBX system has many similarities to a virtual system it may appeal to many of the same type of businesses. However the additional features that a hosted PBX system offers makes this type of private branch exchange slightly more appealing to medium and large organizations with smaller businesses receiving everything they need from their phone system with one of the other alternatives covered above.

Hosted PBX Price Overview

With a Hosted PBX solution your business phone system is maintained and provided by your supplier meaning there is no need for your business to make large upfront investments.

Typically this means a Hosted PBX can be far more cost-effective when compared against traditional PBX. Cost savings also stretch to initial payments as hosted systems require no outlay for in house equipment and should be factored in to any growth strategy for a forward thinking business looking to upgrade their phone system with technology that won’t have to be replaced in two to three years’ time.

Other Considerations

VoIP PBX as an App

Traditionally, the PBX switched telephone systems hardware has been out of reach of smaller organisations due to the cost which is due to the system’s feature rich capabilities but now with the emergence of cloud technology (otherwise known as hosted or virtual), however, this is no longer the case. Hosted solutions work on the premise that larger scaled technology, such as IP BPX, is hosted in a virtual environment and then sold of as a subscription based service, or in this case, platform.

  • All IP PBX phone systems can include options such as conference calling, extension groups, call forwarding, call waiting, and call transfer.
  • Some of the more unusual features these systems offer are fax to email, automatic speech recognition and CRM integration.
  • Voicemail transcribe – Another popular feature is receiving voicemail transcribed in an email or text message.
  • Video chat – Users can also video chat in VoIP in a softphone client on a desk or video phone without the need for a complex telepresence system. And, voice can be integrated with other business applications. For example, a salesperson connects their phone to a customer relationship management system and can access their notes from previous conversations when talking to a customer.
  • Flexible and intelligent call routing – For example, an IP phone can be programmed to ring on a cell phone when an external call is received, but route to voicemail for other calls.
  • Work from anywhere – An IP-based PBX service can view the user from anywhere based on IP protocols, so the user has a virtualized experience and distributed voice calls. An IP service associates a user with a phone number and can register any number of devices. As far as the PBX is concerned they just need to know who you are and where to send the application. It’s a huge benefit to take your phone with you and work from home or an airport.
  • Unified Communications – Now that the PBX is an app, I can view and access it in multiple ways to communicate: instant messaging, data sharing, video and voice.

Telephone Management System Features

Modern VoIP services incorporate advanced Telephone Management System (TMS) features: tools that enable administrators to track, create reports and control communications activity within a business.

TMS features provide business owners and managers with streamlined insights into where money is currently being spent, what impact the expenditure is having on the business, and how future communications expenditure could be best allocated to maximize revenue and reduce costs.

Call Log & Reporting – several forms of call data will be automatically recorded in an IP PBX or cloud PBX system, which can be used directly to pinpoint where savings can be made.

  • Incoming or Outgoing call
  • Caller ID (when available)
  • Extension number / User ID
  • Time of day
  • Number dialled
  • Trunk used (which line the call went out on)
  • Cost of the call

Reports that can be instantly created:

  • Top 20 most expensive calls
  • Top 20 longest calls
  • Top 20 most-dialled numbers
  • Calls exceeding a certain length of time/cost (e.g. > 10 minutes/ > £10.00)
  • Report per extension/user
  • Departmental reports
  • Abandoned call reports
  • Monthly total cost summary reports

How Much Does a PBX System Cost?

The cost of a PBX system will vary as it is always based on the number of users, extensions and feature set selected.

There are also two separate types of costs to consider: installation and setup costs, and ongoing monthly service charges. For example, while buying and installing an on-premise IP PBX server will be a larger up-front investment, you may save longer-term with slightly lower monthly costs over several years than you might get with an equivalent cloud PBX service. This is not an absolute rule, as each case will be different depending on the communications requirements and nature of your business.

We suggest you get quotes from trusted providers who have the expertise and experience to quickly and accurately assess your needs and build exactly the right PBX system for your business.

PBX System Installation

When choosing a PBX and assessing installation costs, businesses need to consider the following points:

  • The number of phone users in the company and their current or anticipated usage
  • How many sites need to be connected, and the amount of call traffic between them
  • The location of the main system and its interconnections to other systems
  • Which call plan best suits your requirements
  • When are the peak periods during work days and weeks for network traffic

If you are looking to implement VoIP for inter-office communications you should also check that each office location has sufficient network technology to deliver the appropriate levels of service, in terms of overall bandwidth, data transfer speed and reliability. Each site should have:

  • At least 10/100 megabit Ethernet LAN (Local Area Network) switches, that interact with and interpret quality of service features with routers
  • Cat 5 Ethernet cabling infrastructure to support 100 megabit data rates (and power for IP phones if you’re using them).

You should also bear these factors in mind when considering networking for VoIP implementation:

  • The bandwidth in your LAN (Local Area Network) may very well be greater than in the WAN (Wide Area Network), so you will need to factor in the appropriate headroom to ensure smooth operation,
  • Your router and switch networks should have enough free IP addresses available to support IP phones, and the routers should support voice compression
  • Resilience refers to the levels of reliabilty and security in network systems, particularly in terms of backup measures should primary power to the system be lost. Businesses should have a standby power system to maintain a phone network if there is a mains power failure.

PBX System Suppliers

In the UK, Cisco, NEC, RingCentral, Vonage, Siemens, Fujitsu and Avaya are some of the leading brands that can help small-to-medium businesses in particular get the most out of VoIP and cloud PBX technologies and applications, providing platforms that can deliver a host of productivity and efficiency-enhancing features as outlined in this article.

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Aimee Bradshaw Writer and researcher

Aimee is Expert Market’s resident telephone systems, point of sale, and field service software go-to. If she’s not writing about business products, you’ll find her daydreaming about Dorset beaches.

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