Product hero

How Does PBX Work

A private branch exchange, or PBX, is a telephone communications system, typically used in a business setting.

An easy way to visualize how a PBX broadly operates is to imagine an old-fashioned telephone operator exchange. In these systems, a human would physically connect phone plugs across a panel to connect one caller with another. PBX technology performs this once-manual exchange task automatically and instantly.

While PBX systems come in a variety of forms, they all offer these core functions:


Different PBX Systems Compared

There are four kinds of PBX system, each offering its own features and benefits.

Traditional PBX

A traditional PBX system is physically installed on a company’s premises.

•  The system is made up of multiple phone lines connected to a main PBX unit.

•  Via a software dashboard on a connected computer, an operator can manage the company’s internal phone directory and configure how the PBX handles inbound        and outbound calls.

•  Calls on a traditional PBX are still sent and received as an analog signal, essentially operating like a conventional handset on the public switch.

Traditional PBX is somewhat limited by its dependence on analog encoding and the need for regular in-house management and maintenance. However, these systems may still be a good option if you prefer direct physical control over your phone lines, or if your premises are limited to older copper telecommunication wiring.



An Internet Protocol (IP) PBX works similarly to traditional PBX, but with one crucial technology addition. An IP PBX converts internal IP calls into a conventional signal that works across the public switch telephone network.

•  An IP PBX system is still physically installed on the company’s premises, and changes to the system (for example, new lines or different phone menus) are all                     managed in-house.

•  Crucially, this technology can support both analog and IP calls within your company — opening up the option to manage a gradual and phased transition to IP                  calling.

An IP PBX acts as a bridge between VoIP and public switch calling. All your telecommunication and data connectivity can therefore be handled through just one provider, offering significant savings.


Explore Mitel's award-winning hosted PBX systems >


Hosted/Virtual PBX

A hosted PBX is not installed onsite. Instead, PBX system features are offered to your company as a cloud-based subscription service.

• A hosted PBX solution allows you to simplify your communication infrastructure. All you require onsite is an Internet connection.

• You retain access to basic phone management features (such as conference calling, menu management, and voicemail), but your hosting company handles the more technical aspects of keeping your PBX up-to-date and functional.


Hosted/Virtual IP PBX

A hosted IP PBX is similar to a conventional hosted solution, but with the added feature of supporting IP phone calling within your company.

• This solution involves the least infrastructure outlay of any PBX option. Connecting VoIP communications directly to a hosting server, you can use IP PBX to manage all your voice communications without investing in so much as a handset.

• It also requires the least management. IP PBX allows you to enjoy constantly updated and secure communication features with minimal in-house telecommunication maintenance or management expertise.

An increasing number of companies are migrating to hosted solutions, mainly because they’re inexpensive and scalable. You can purchase more phone connections at any time without worrying about whether your hardware can handle it. You also lower your costs, substituting equipment, and maintenance expenses for one monthly rental fee.

Through PBX, you can reliably, securely, and affordably connect your staff with your customers.

Ready to talk to sales? Contact us.