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What Is a PBX Phone System?

You may have come across the word PBX which stands for Private Branch Exchange. Wondering what does it means? We are here to help.

PBX is simply a term meaning enterprise-grade phone system. Business phone systems provide key voice features that companies need to run daily operations. Such features include:

  1. Extension dialing.
  2. Business hour settings to route calls off hours.
  3. Customer waiting queues.
  4. Music on hold.
  5. Call conferencing.

Residential telephone lines and cell phone services do not provide these features. PBX come in with a wide range of features although most today are digital and leverage the Internet to send voice and video communications.

Traditional Phone System:

These systems have been around for a long time and connect to the Public Switch Telephone Network (PSTN) over Plain Old Telephone Service (POTS) lines. The PBX organizes calls between phones and fax machines by being physically connected to them over copper wiring. Incoming calls are routed via PBX and out to the phones and calls can be transferred between phones via the PBX. The PBX itself typically lives in telecom office’s closet.


With the gradual replacement of copper lines with broadband Internet, Internet Protocol (IP) PBXs are the most common systems that are used in small medium organizations and enterprises. Although it is still possible to purchase analog systems, it is certainly not desirable as they are not expandable or upgradeable. They need adapters in order to work with VoIP or other digital hardware.

An IP PBX provides voice calls over the Internet, otherwise known as VoIP. An on-premise IP PBX is a VoIP-based phone system that is housed within the office typically in a telecom closet. Instead of physically connected to the PBX with copper wiring, phones are connected to the PBX over an office’s Local Area Network (LAN) that is often leveraging the same Internet connection that your office computers do.

IP PBXs have the capability of high-quality audio and many other sophisticated PBX features due to leveraging the Internet such as:

  1. Call queuing.
  2. Flexible business hour rules.
  3. Application integration.
  4. Interchanging with other unified communications and CRM platforms.

A lot of enterprises are now using on premises IP PBX systems for their communication needs. Far away from the office’s PBX and LAN, there’s one more component to make the phones work: Primary Rate Interfaces (PRIs) or SIP Trunking service. In this way, anyone using PBX extension from soft or IP phone can make calls to and from their office to the outside world.

If you don’t have IP PBX knowledge or new to the product you will need the help of an IT professional to maintain an on-premise IP PBX. The costs associated to an on-premise IP PBX include:

  1. Equipment (PBX and phones).
  2. SIP Trunking or PRI service.
  3. The IT professional’s time to deploy and maintain the phone system.

Hosted PBX or Cloud Phone System:

A hosted PBX (or Cloud PBX) service takes the phone system out of your telecom closet and puts it “in the cloud.” In other words, hosted PBX is a VoIP PBX that is maintained by a service provider and allows enterprise to connect to it over the public Internet. For the customer, this reduces PBX maintenance costs, the hassle of upgrading PBX software and service downtime, because all these issues are managed by the service provider.

The hallmark of this approach is minimum upfront capital expenditure, making it often the best fit for small and medium sized businesses. Most hosted PBX providers do not need customers to purchase any equipment beyond IP phones. If you make a phone call, the SIP Trunking service is also managed by the hosted PBX provider. The call will travel over the Internet to the provider and then back out to the PSTN.

More Info:

Looking for a PBX or SBC? Read What is a Session Border Controller on Clarity Technologies Group to consider your choice and identify the best solution for your business.

Clarity is proud to have been providing on premises and Cloud Hosted Telephony to the America’s and the world since 2006. Our clients are worldwide and currently using our unified communications platform. Clarity Technologies Group, LLC surpasses expectations.


Call Clarity at 800-354-4160 today or email us at [email protected]. We are partnered internationally around the globe and we are open seven days a week 8:30 AM to 5:00 PM EST/EDT. and https://dotmantech.com.

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