What Is a PBX System?

If you’ve called a business and had your call rerouted, listened to a custom greeting, or sat on hold, you’ve used a PBX (private branch exchange). A PBX is a telephone switching system that connects multiple extensions within an office to each other as well as to a small number of outside lines.

Key Q&A

Can a PBX do more than route calls?

A modern PBX can be the foundation for a collaboration solution that includes not just voice calls, but also supports messaging and chat, video conferencing, mobility, and interactive voice response (IVR).

How can a PBX help a business?

A PBX helps increase productivity and gives your business a professional voice when communicating with customers, colleagues, and partners.

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Types of PBXs

Traditional PBXs

A traditional PBX connects to phone landlines through dedicated hardware, typically a switching console. All connections are wired, creating a physical voice network separate from the business’s data network. While many traditional PBX systems are still in operation, they are becoming obsolete as cloud-based options with new features become available.


An IP PBX works through the cloud, over the same network as data, which means less hardware and less IT overhead. Other advantages include easier scalability and customization; the ability to use an IP phone, landline phone, or soft phone (a headset attached to a computer); and greater integration with outside apps and CRM (customer relationship management) tools.

An IP PBX is not just expandable; it’s also upgradeable. So, it will always take advantage of the latest technology and be more feature-rich than previous PBX systems. An IP PBX also allows for easy management of users, settings, and features from a web-based interface.

IP PBXs: locally hosted

An on-premise, or hybrid, IP PBX uses your office’s LAN (local-area network) to connect extensions to a server onsite, which then uses the Internet to connect calls. It can also be adapted to connect to traditional phone lines. While this option works over the cloud, it still requires significant hardware and onsite setup.

VoIP PBXs: remotely hosted

A full IP or hosted PBX does away with the local server and instead resides completely in the cloud, using only VoIP (voice over IP) to connect and transmit calls. This option is usually delivered as a service, which means you don’t have to buy hardware, and your upfront costs are lower.

Most providers don’t require you to purchase anything other than IP extension phones. So, VoIP PBX can be a good option for small businesses or companies on a budget.

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