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What's the Meaning of PBX?

Here is a basic primer to give you a better understanding of PBX systems.

PBX stands for Private Branch eXchange, and has become a general term used to describe a business telephone system that offers multiple inbound and outbound lines, call routing, voicemail, and call management features. While many IT professionals are well-versed in networking technology, today, they must often also handle (or manage vendors who manage) the company PBX system. The following is a basic primer to give you a better understand of PBX systems.


What Is A PBX?

A PBX is a Private Branch eXchange, a hardware system that handles routing and switching of calls between a business location and the telephone network. Originally, the PBX was not a thing but a switchboard operator; their name originates from the way they interact with the public switched telephone network (PSTN).

"Private" refers to the fact that they are separate from the PSTN, even though they can connect to it. "Branch" describes how a PBX fits into a PSTN: the main communication circuits are called trunk lines, and end points that connect to it and handle smaller amounts of traffic are called branches. "Exchange" refers to the fact that connections are exchanged through a switching system, allowing larger numbers of calls to be routed through a limited number of lines.


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What Does A PBX Do?

It handles the same functions as old-fashioned telephone operators, who once sat at large manual circuit boards, spoke with each caller to learn who they were trying to reach, and manually plugged wires into connectors to complete calls. Modern systems are automated, incredibly speedy, and can do a great deal more than any manual operator.

A PBX also provides sophisticated calling features such as call waiting, auto-attendants, music/message on hold functions, and voice mail. Advanced features like find-me-follow-me are very useful for companies with highly mobile employees or sales forces, are also provided through a PBX.


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What Are Key Systems? Are They The Same As A PBX?

No, the two are actually quite different. A key system is typically only useful for small businesses, with limited numbers of users (typically less than 50). A key system has telephones with multiple buttons ("keys") with lights that indicate which lines are in use , like you might expect to see on a receptionist’s desk. It is limited in function and feature set. Unlike users on a PBX, users on a key system typically do not have an assigned extension or Direct Inward Dial Number (DID) that rings only their phone. In fact, a common key system configuration is to setup incoming calls to "Ring All" (i.e. all incoming calls ring on all phones). It is also less common for key system users to have a private voicemail box.


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What Are The Types Of PBX?

There are four main types of PBX systems, distinguished by location and operation. A PBX may be located on the premises of the business, or offsite at a PBX management office. They may operate by Internet protocol (IP) or by older technologies like analog or digital phone lines.

Traditional PBX

On-premise PBX (located at the business, using analog or digital systems)

Hosted Traditional PBX (located offsite, using analog or digital systems)

IP-Based PBX

On-Premise IP PBX (located at the business, using IP communications)

Hosted IP PBX (located offsite, using IP communications)

How Does A PBX Work?

A PBX is based around a PBX board. Years ago, that meant an exposed wiring panel with sockets into which an operator plugged wires to complete the connections for calls. They were, literally, boards with sockets connected to dense packs of wires through which calls were routed. Today they are circuit boards: very compact and very efficient.

The heart of a PBX is a specialized computer that evaluates the routing needs of large numbers of communication paths, correctly routes many links simultaneously, and makes efficient use of limited amounts of bandwidth. What once required human operators and a gigantic workspace now fits into a single slot in a server rack.

Hosted PBX comes in two main varieties: the standard hosted system, and virtual PBX. Standard hosted systems are like an onsite PBX but physically located at service a provider’s server center. Virtual PBX is a term often used interchangeably with Hosted PBX, but in some cases there is a distinct difference: virtual PBX may refer to a very simplified system that handles only call routing in single locations. Such systems may struggle with multi-site applications, direct inward dial, or many of the more robust features included in an actual hosted PBX.


Why Choose One Type Over Another?

Each business telephone system configuration has advantages and drawbacks. When choosing the configuration for a business, the easiest way to determine the right option is to examine two main variables: location and communication type.


Onsite Vs. Offsite

Onsite systems (on-premise PBX) offer more direct control over the phone system’s operation. When a business needs to add, change, or delete a line from the system, it can be handled in-house. This requires a high level of expertise from onsite IT professionals, however. Offsite, or Hosted, options shift the responsibility for configuration and maintenance to a service provider. Direct control of the system is limited, but a company’s IT staff needs only a basic understanding of the phone system.


Analog/Digital Vs. Internet Protocol

Analog systems use traditional wiring and are generally distinct from a company’s computer networking hardware. IP-based systems are integrated into the same networking systems used for sending and receiving e-mail, web browsing, and other online functions. Traditionally-wired systems sometimes had fewer call-quality concerns than early IP-based systems – though modern ones on strong networks have greatly improved. Using IP-based systems often allows a company to have all its communication needs handled by one provider, simplifying billing and support concerns.

Dive deeper into analog vs digital phone systems or find out how they compare to IP-based phone systems >


PBX Reviews

"For two years running, mid-market and enterprise customers have ranked Mitel the 'Best Value' in the Eastern Management Group's annual PBX (premises and cloud) customer satisfaction research. Mitel's position this year is bolstered by another first-place ranking for the company, purchase experience, in Eastern Management Group's audit of satisfaction measurements. Thousands of IT manager customers participated in the review of 33 premises and cloud PBX companies." —NoJitter


Read the whole story on why Eastern Management's customer satisfaction survey ranked Mitel the best value in PBX >


PBX Use Case

Let's explore an example of a business that has 100 employees. The business is only ever going to have ten of their employees talking to the public network, so now with a PBX they would only be paying for ten lines instead of paying for all 100. All the calls internally are now free because they're going to the PBX.With a PBX, the business can start to leverage other features like push-to-page capabilities that allow users to page everyone in the building or page people individually.

Over time, PBXs got bigger as organizations got bigger. Sometimes, they started to span locations so you'd have a PBX at multiple sites and you'd have an established private connectivity between each instance. For example, one employee might be in Los Angeles, where one PBX instance is, and another employee might be in Boston, where a different PBX instance is. These two employees could internally dial to each other through a private connection that wouldn't be going out to the PSTN. 


See which type of business phone system may be for you and why >


PSTN Meaning – What is a PSTN?

PSTN stands for public switched telephone network. The term refers to the traditional telephonic network covering our globe, which provided the primary method of remote voice communication throughout the 20th century. You may also have heard the PSTN referred to as the “landline” telephone network. 

Developed in the late 1800s, the original PSTN operated solely via copper lines and operator centers. However, a century of telecommunication innovation has seen the PSTN gradually encompass newer technologies—including fiber optic cables, satellite communication, and automated switching centers. 

The key to understanding the basic idea of how the PSTN works is to consider the nature of an electrical switch. Just as a switch can open and close a circuit controlling an electrical appliance, the public switch telephone network works by switching circuits open and closed between telephone handsets. However, to accommodate the complexity of millions of separate telephone lines, a series of switches are triggered along a chain of geographical exchanges of varying sizes.

For example, if a person wanted to call an international business from their residential phone line, their telephone unit would first open a circuit (known as an “open line”) with a local switching exchange, typically located in the caller’s geographical area. The line would then progress to a junction network (a telephone exchange serving a much larger geographical area) and a toll office (infrastructure responsible for routing calls internationally). In the target country, a similar process happens to complete the voice connection.

In the early 20th century, several human operators would cooperate to make this happen. Today, of course, the PSTN calling process is mediated via computers, and it happens almost instantly. 

The PSTN remains in wide use today, though VoIP-based communication, where voice calls travel over the internet, is rapidly replacing PSTN infrastructure, in large part because it’s more cost-efficient and reliable.


PSTN vs PBX – What's the Difference?

We can get an idea of the similarities and chief differences between a PSTN and a PBX from each acronym. 

A public switched telephone network (PSTN) is, by definition, public. This network is vast; it connects any landline phone to any other landline phone anywhere in the globe via a chain of interconnected switches.

Like a PSTN, a private branch exchange (PBX) is also an exchange of switches. However, a PBX network is private. It operates separately from a PSTN. It handles a comparatively small number of phone users. It is owned not by a government or huge telecom company but by a private enterprise—typically a company or similar human organization.

Because a PBX works on a much smaller scale and for a particular purpose (i.e., business communication), it delivers a richer set of features than conventional PSTN voice communication. 

Unlike conventional PSTN calling, a typical PBX will usually incorporate:

Beyond these enhanced features, a PBX also acts as a point of interface between a company’s private communication infrastructure and the PSTN. Instead of a company having to pay for and maintain a separate PSTN phone line for each of its employees, a PBX allows a company to accommodate all its external voice communication requirements with a small number of external lines. 

In this way, a PBX is a cost-efficient corporate communications solution and generally introduces meaningful technical efficiencies across a company’s communication infrastructure.  


Definition of PABX

The term PABX refers to a private automated branch exchange. Let's break down each of these words to better understand what a PABX telephone network is and how it works.


A PABX is a private network of phone lines. The term private here has two separate but overlapping meanings:

First, the system operates independently of the public switch telephone network. Calls taking place inside this network of phones aren't recorded, billed, or otherwise mediated by a telecommunications company. 

Second, a PABX is privately owned, usually by a company. All of the infrastructure required to make a PABX call happen is the hosting company's property. (It's important to note that hosted PABX solutions are a little different because the cloud infrastructure upon which a hosted PABX solution depends is owned and maintained by a third-party company.) However, in each case, the infrastructure is a private asset.


Here, the term "automatic" applies to an automatic process of connecting two callers. A PABX uses a computer and software to connect two callers instead of being handled via a human operator. 

The term implies that requested voice connections happen swiftly and doesn't rely on unnecessary human intervention. It's resource-efficient. 

Automation also makes it easier to leverage additional features. Powerful automated functions can be layered on top of the basic connective process. Automation of phone line connection means that companies can readily build call forwarding, email integration, and various other advanced functions into their communication toolbox. Automatic switching, therefore, offers a wealth of connected feature enhancements.


The term "branch" builds on a tree metaphor to describe how a PABX system connects with the public switch telephone network (PSTN). A line that directly connects to the PSTN is known as the trunk line. Branch lines are PABX managed phone lines that connect to individual employees within a company. 

The word "branch" here means this system allows few external phone lines to connect to many internal lines. The term is describing a one-to-many relationship.


If branches describe the shape of a PABX, the word "exchange" describes its function. A PABX operates as an exchange point for a caller and a call receiver. Using a trunk call and a complex array of branch lines, a PABX successfully opens a requested voice line of communication. 



PABX Telephone System - An Overview

To better understand PABX systems and their significance, it helps to understand both their historical and technological context.

When were PABX systems first used?

Old-fashioned copper-line public phone systems were developed in the late 1800s. PBX systems are a comparative newcomer to corporate communications and were first introduced as a cost-cutting technology for businesses in the 1960s. 

By the 1970s, PBX had become standard practice, and features like interactive menu systems, call forwarding and other now-ubiquitous phone communication features began to form a backbone for how a business electronically communicated with the outside world. As the field of computing gradually improved in power and reliability, PBX systems became more automated and became a mainstay of communications by the 1980s.

What kinds are there?

Broadly, there are two kinds of PABX telephone systems, although many sub-variants fall within these two broad categories. 

Hosted PABX is rapidly becoming the preferred solution because it costs less, is easier to maintain, and efficiently scales.



PABX Telephone Switch

A PABX telephone switch is another term for a PABX exchange. Picture a human operator at a switchboard, manually connecting callers via many plugs connected to a large dashboard of open lines. A PABX telephone switch performs this same operation, but with hardware and software in place of a human operator.

It probably goes without saying that a computerized PABX telephone switch is faster and more reliable than human operator services. But there are added advantages over simple reliability. 

A PABX telephone switch is:


PABX Vendor 

The days when a PABX vendor purely sold handsets, headsets, and servers are long gone. 

Today, a PABX vendor's services should encompass a wide range of tailored solutions, encompassing physical infrastructure installed on-site as well as service models focused on delivering cloud-based services. 

A PABX vendor may also offer a wide range of hybrid solutions. For example, they might help you take advantage of existing infrastructure in your workplace (such as copper lines or existing server equipment). They'll also offer solutions that reflect how your company is organized, both geographically and technologically.

Moreover, today's telecommunications are such that a company's phone system can and should be thoroughly integrated into your broader communication strategy. A phone system can't stand apart from online chat, emails, video conferencing, and the vast array of other ways of sharing information that we now have at our fingertips. It should be part and parcel of the total communication experience.

A PABX vendor should be able to position your company to experience minimal friction in moving across these communication channels. Your company's size, industry, and business model all need to form part of this complicated equation. 

Ultimately, a PABX vendor should listen to your requirements and have solutions at hand that will conform to you and where your company is heading, rather than the other way around. 

PBX vs PABX - What's the Difference?

You may have encountered the term "PABX" and wondered how this technology differs from a conventional PBX. The term PABX refers to a private automatic branch exchange. Another way of defining a PABX, then, is to think of it as a conventional private branch exchange that can connect callers without a human operator's assistance.

So, how does this technology differ from a conventional, present-day PBX? The short answer is that it doesn't. A PBX and a PABX are effectively identical. 

Where the original company PBX systems may have relied on a human operator to physically connect one caller with another, these call exchange functions are now routinely automated. A computer system is faster at this task than a human operator, is more cost-effective, and readily configured to provide a host of necessary call connecting tasks. For a company of almost any size, a human operator now merely provides a support role to the exchange technology—perhaps to answer a caller's general query, for example, or to assist a caller in finding the right person with whom to communicate. 

The word "automatic" doesn't change the meaning of PBX, then, so much as add detail to the term, signaling very clearly that an automated system handles calls through this exchange. 

In theory, a PBX may depend on a human to complete a call connection. A PABX, by definition, won't. In practice, with computer automation now handling all the voice communication "heavy lifting," the terms PBX and PABX are used interchangeably. 

Ultimately, PABX is a more nuanced term for PBX. Like PBX, the term refers to a privately owned and controlled network of business phone lines. Whether an onsite solution or cloud-based, a PABX can deliver an effective way to carry out internal voice conversations, as well as a resource-efficient way for a company to communicate by voice with the outside world. 


More About PBX Phone Systems & Solutions


• What is hosted PBX phone service and how does it work? Find out here >

• Compare PBX vs VoIP phone systems >

• Discover the top advantages, benefits and disadvantages of cloud hosted PBX systems >

• Learn more about hosted PBX phone systems for small business >

• What's the definition of PBX? What are the different types and which is right for different situations? 

PBX Solutions: What you need to know >

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