What is a PBX (Private Branch Exchange)?

What is a PBX? 

PBX, or Private Branch Exchange, is a term you’ll hear quite often in the communications landscape. The Private Branch Exchange system is a standard part of most company technology stacks today. However, the definition of what a PBX is, and what it can do has begun to change.  

A PBX allows users to create their own telephone network within a company or organisation. With this system, employees can communicate internally for collaboration purposes and externally, with customers, shareholders, and other contacts using channels like VoIP or ISDN.  

The PBX is a business telephone system first and foremost, evolving from the old-fashioned Key Telephone System, into a comprehensive tool for internal and external communication.  

Where Did the PBX Come From? A Brief History 

The Public Branch Exchange was designed to solve a common problem.  

The traditional telephone system, or the “Plain Old Telephone System” (POTS), allowed users to connect calls using the Publicly Switched Telephone Network, or PTSN.  

Before the PBX, all calls placed were directed through this public network. This meant that even if you were calling a colleague a few feet away from you, there’d still be the price of a public call to account for. Companies needed a more cost-effective way to manage communications, and a solution that would align with their external communications strategy. 

The term “PBX” first emerged in the 1970s to describe a switching system serving a private company. The switching system allowed for the sharing of central office trunks between various telephones throughout a business. The central office lines in the PBX could also offer connections to the Public Switched Telephone Network, or PSTN.  

In the first era of the PBX, most businesses were dependent on manual PBX environments, which involved people at a switchboard connecting cords from one location to another. Eventually, automated systems emerged, making switching much simpler.  

Gradually, PBX solutions evolved to include things like call forwarding, hunt groups, and extension dialling. In the 1990s, the PBX experienced two significant evolutions. The growth of data network and an increased understanding of packet switching led to the development of IP PBX.  

What is a PBX Phone System? 

PBX is an acronym that stands for “Private Branch Exchange.” This refers to a private telephone network that allows users to talk to each other, often in a business landscape. A PBX operates the internal telephone network of the company, managing routing and calling capabilities for outbound and inbound calling.  

A PBX Phone system today is a solution which provides businesses with the necessary features and functions exclusive to business communication needs. This includes offering companies the ability to manage various outbound and inbound calls, offer individual extensions to employees, and even set up auto attendants and call management features.  

The PBX differs from the older Key Telephone System or KTS in a few ways. The users of a KTS used to have to select their outgoing lines manually using special telephones with unique control buttons. Alternatively, PBX solutions can select the outgoing line automatically. Telephone sets for the PBX environment generally don’t have central office line control buttons.  

Each device connected to the PBX, from telephones and computer modems to fax machines, is an “extension” with a designated extension number. When the PBX arrived, it offered businesses the advantage of cost savings on internal phone calls, by handling circuit switching via central office lines. As PBX systems grow more popular, they also began to take on new features.  

There are various kinds of PBX available today, which may use various communication channels, such as VoIP (Voice Over Internet Protocol), and Integrated Services Digital Network (ISDN).  

What Can a PBX System Do?

PBX solutions used to be tools specifically designed to allow for internal networks to operate within a business environment. PBX redesigned the way that companies handle calls, minimising the demands on corporate budget and opening the door to digital transformation.  

Today’s PBX system can split a single phone line into various private lines, all identified by extensions. This means anyone can reach someone else in an office through a single phone number. Additionally, with a PBX, multiple unique phone lines are no longer a requirement. Features of PBX systems include: 

• Managing and completing calls: PBX solutions allow for the management of calls and the control of various PBX branches. Operators can restrict or permit international and local dialling options based on a phone service.  
• Call transferring: You can transfer calls between users and departments with ease. This makes it easy to establish and maintain connections in a company with minimal dropped calls
• Advanced calling features: PBX solutions can now be equipped with tools for Direct Inward Dialling (DID), IVR (Interactive Voice Response), call recording, and other features
• Local connections: Offering users access to local numbers in cities where they aren’t physically present, for a more local brand experience
• Call control: Call blocking, forwarding, logging, transferring, call waiting, and various other calling features
• Office connections: Connecting multiple office locations within the same phone system, to keep employees in different destinations connected

Depending on your PBX service, you can also unlock a host of other features through your PBX system, including Do Not Disturb functions, speed dialling, conference calling, call parking, and call logging. Some companies even use things like “Follow-me” functionality to configure the exchange for a list of numbers for a person, so that a call can be routed to an employee regardless off where they are.  

The Types of PBX Systems 

PBX technology has evolved significantly over the years. We no longer have the manual PBX switching services from the early days of internal communications. Increasingly, more companies are beginning to move their PBX environment into the cloud, so companies can configure a shared phone system across various users and locations.  

The most common options for PBX functionality today include: 

• On-Premises PBX: An on-premises PBX is becoming a little outdated in the modern digital age, but it’s still something that many companies prefer to invest in. On-premises solutions give you an on-site environment where you can handle all of your PBX needs. This product might be ideal for people who aren’t planning on growing or expanding fast. There are additional maintenance costs and technology investments to consider, however
• Hosted PBX: A Hosted PBX is essentially the “new era” of PBX technology. Internet-based PBX solutions allow you to manage your employees’ phones and technology from your web browser. You just purchase the phone and service, then you can roll out and adapt features of the PBX functionality from an online portal. The online environment will usually offer control over things like call forwarding, hold music, auto attendants, and call routing. You might even be able to set up custom hold messages

PBX SIP trunking has also emerged as a common investment in the digital world, allowing companies to connect their existing PBX to the internet. This allows companies to use their on-premises or existing installed PBX but expand it to the internet. A SIP trunk is a direct virtual connection between two environments, similar to the connections between extensions in a hosted PBX landscape.  

What is an IP PBX? 

As copper lines make way for broadband internet, IP PBXs are emerging as the most common systems in most enterprise environments. While it is still possible to purchase analogue options, companies often prefer the unique advantages available from an IP PBX.  

The IP PBX first emerged in 1997. Within a few years, VoIP, or Voice over Internet Protocol, became a common part of the PBX conversation. The solution allowed for multimedia transmissions and the delivery of larger packages of data throughout the business network. Not only could VoIP transfer more data over the internet, but it could also do so without increasing data usage costs.  

The biggest benefit of the IP PBX system for many companies was the arrival of new virtual hosting opportunities. With the IP environment, there was no longer a need to rent, maintain, and upgrade computerized switchboards within the business environment. Instead, companies could simply use an internet connection to process and transfer their data.  

As companies began to handle more of their calls through the internet, new interfaces and PBX functionalities emerged. Soft phones offered employees a way to look at monitors and see all kinds of telephony information on a display. The soft phone could turn any connected device with a set of headphones and a microphone into a desk phone.  

Other new features included: 

• IVR menus: Interactive Voice Response routing to help users reach the right extension 
• Voicemail: The ability to collect voice messages and transcribe them into text 
• Scheduled routing: Changes to routing systems based on business opening hours 
• Portable phone systems: Mobile business phone numbers for employees 
• Call queuing: Better management of calls on hold  

Because they leverage the internet, IP PBXs are also capable of higher-definition audio and many other sophisticated features, including integrations with various applications, allowing for the evolution of the UC and UCaaS environment.  

The Benefits of an IP PBX System 

The evolution of the IP PBX system introduced companies to a new world of cost savings and efficiencies for the communication landscape. Older phone systems not only had fewer features than the modern IP PBX, but they were also more costly in terms of maintenance and monthly phone bills. Dedicated hardware and wiring requirements meant investing in specialised services and support. 

An internet connection also meant that businesses could access their phone system from anywhere, making it easier to bridge multiple offices. Now more than ever, we’re seeing the impact that IP PBX technology can have on the need for mobility and remote work. Thanks to online connections, even if users aren’t in an office, they can use a web browser or smart phone to manage their communications and maintain the same business phone number.  

Cloud or IP PBX solutions are: 

• Scalable: It’s quick and easy to expand an IP phone system with new extensions and numbers  
• Flexible: Companies can infuse their PBX with call centre functionalities, like auto attendants, call forwarding rules, and advanced queue strategies
• Adaptable: The current IP PBX system can easily transfer larger packets of multimedia data through the web. This means you can handle not phone audio calls, but web conferencing connections, video calls, and instant messaging 
• Extensible: In the cloud, companies can combine their IP PBX environment with other functionalities and tools for a comprehensive UCaaS experience  
• Global: The right PBX vendors can offer data centres to help you transfer packets of data and communication information anywhere in the world

From PBX to Unified Communications 

The latest era of PBX technology takes the potential of IP connections to the next level, with the promise of unified communications. The introduction of cloud and internet-based service was a crucial revolution in the communications landscape. Call routing today is only a small ingredient of the full communication formula.  

PBX solutions in the age of UC are rarely advertised as standalone services. Instead, you get your PBX technology bundled with other essential features for team connectivity. Features can range all the way from traditional PBX components, like voicemail hold music, and routing technology, to video conferencing support, and voice to text recordings.  

PBX technology now operates alongside instant messaging tools for collaboration in the hybrid workforce, video conferencing, and group calling. We’ve seeing the arrival of new UC features to enhance and supplement what the PBX can do all the time, from intelligent systems that assist with routing, to clever voice analytics tools which help with monitoring call quality.  

The Future of the PBX 

The PBX started off as a simple solution to an expensive problem. Once a tool intended to reduce the costs of connecting with internal employees, the PBX is now a crucial component of a transformational communication experience, in an increasingly digital world. Today’s UC vendors are constantly upgrading their services to support a changing communication landscape.  

 

 

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