What is a PBX?

PBX stands for Private Branch Exchange, which is basically a business telephone system that allows calls to be “exchanged” (or switched) between different “branches” (or lines) within a business.

The term PBX originated with call switchboards of the past, where operators would manually switch calls to the correct line or extension by unplugging and plugging cords. As technology evolved, machines took over the actual switching of phone lines, but the term PBX still refers to a telephone system that allows calls to be “exchanged” between different “branches” (or lines) within a business. This process is simply handled digitally now instead of manually.

What is an IP PBX?

An IP PBX is a phone system that operates over the Internet (or Internet Protocol, “IP”) as opposed to traditional analog phone lines. IP PBXs generally cost less and provide as good or better quality as traditional landlines, plus they’re typically capable of providing advanced phone system features like mobility, call routing, conferencing, and more.

Check out our IP PBX page to learn more about how IP PBXs work and how they can benefit your business. Learn More

There are two basic types of IP PBXs: On-premise and hosted/virtual. Let’s look at each of these types of IP PBXs and how they can benefit your business or organization.

On-Premise IP PBX

An on-premise IP PBX is simply a phone system in which the hardware and components that actually power the phone system are kept on-site at the location where it is being used. This is what comes to mind first for many people when they think of a PBX.

IP PBXs can save businesses money, time, and IT resources, and they also have the added benefits of increasing flexibility, scalability, and ease-of-use. Those are the benefits of all IP PBXs regardless of deployment type.

But what about the benefits of on-premise solutions in particular? Here are a list of a few benefits you can expect from an on-premise IP PBX:

  • No risk of fee increases
  • Lower total cost of ownership especially as the system grows
  • Complete control and flexibility—you can even switch solutions or mix-and-match
  • You can do what you want with your equipment—ultimate flexibility
  • You will know your system’s capabilities since you are handling its deployment

Now let’s look at hosted and virtual PBXs and the benefits that they can offer.

Hosted IP PBX/Virtual PBX

A hosted IP PBX is basically a phone system where the actual hardware for the phone system lives (or is “hosted”) someplace off-site instead of within a business’s physical location.

Hosted phone systems are often called “cloud” phone systems because the phone system components that would normally reside on-site are now being hosted in the “cloud” - which is simply on a server that is located someplace else and is accessed over the internet.

A virtual PBX is typically thought of as another name for a hosted PBX. Think of a virtual PBX as a virtual version of a phone system. In other words, it’s a complete “virtual” phone system where most of the phone system hardware lives someplace other than your actual place of business (typically at a data center or “cloud” center, which is why virtual PBXs are often called hosted or cloud PBXs).

What’s great about a virtual PBX, or hosted PBX, is they can (and should) include all the features of an on-premise VoIP phone system without the commitment or upfront investment that accompanies on-premise PBXs.

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To learn more about hosted/virtual PBXs, check out our Hosted IP PBX page.

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