What Is a PBX Phone System?

A PBX (private branch exchange) system allows an organization to manage incoming and outgoing phone calls, as well as internal communication. A PBX is made up of hardware and software that connects to communication devices such as telephone adapters, hubs, switches, routers, and telephone sets.

PBX Functions

Modern PBXs have several management features that make communication easy and more effective within organizations, helping boost productivity. Their size and complexity vary, ranging from expensive and complicated large-scale corporate communication systems to basic plans that are hosted on the cloud for a low monthly fee. Simple home-based PBX systems offer basic features as an upgrade to existing traditional phone lines.

The functions of a PBX can be complex, but these are the essential features: 

• Use of more than one telephone line in an organization.
• Management of outgoing and incoming calls.
• Splitting of one single phone line into several internal lines, which are identified through three- or four-digit numbers called extensions, and switching calls to the appropriate internal line.
• Internal phone communications.
• VoIP (Voice over Internet Protocol) calling, which has a number of features and enhancements over traditional telephony, the most prominent being the cost savings.
• Quality interface with customers through features such as call recording, voicemail, and IVR (interactive voice response).
• Automated responses, which automatically direct users to the most appropriate lines through voice menus.

The IP-PBX

PBXs changed a lot with the advent of IP telephony (VoIP). The newer IP-PBXes use the internet to channel calls. IP-PBxes are usually preferred because they offer many features. With the exception of old, already-installed but still working PBXs and those chosen because they are inexpensive, PBX systems nowadays tend to be IP-PBXes.

The Hosted PBX

Today, you don't have to invest in the hardware, software, installation, and maintenance of an in-house PBX, especially if you run a small business and the cost of ownership would be greater than the benefits. Numerous online companies offer hosted PBX service for a monthly fee that doesn't require you to pay for hardware other than your telephone sets and router. These services are cloud-based and delivered via an internet connection.

Hosted PBXes have some disadvantages—they're more generic, with fewer options to tailor the system to your precise needs—but they are cheap and don't require an upfront investment.