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How Does A Telephone Exchange System Work?

How Does A Telephone Exchange System Work?

Telephone exchange systems in one way or another have been around for many years. Although they have advanced considerably since they were first introduced in the late 1800s, the basic principle remains the same.

In the old telephone exchange systems connections would be made by a human operator who would be required to manually connect wires using a switchboard. Modern telephone exchange systems have removed the requirement for this manual connection with an electronic component. One of the basic functions of a telephone exchange is its use in the public switched telephone network. This provides telephone connections on an international basis and consequently telephone exchanges now have the capacity to provide a connection for a number of different telecommunication systems including telephone lines, satellites and cables.

There are currently two types of telephone exchange; public and private. The private exchanges serve a specific building or office and are typically used by businesses who use them as an internal network to enable communications to be made between departments. Public telephone exchanges are those used by many residential customers through landlines which are rented from a service provider.

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Choosing the right telephone system for your business

There are now so many ways that businesses can communicate including the traditional landline to the more advanced Smartphone’s and tablet devices. It is important for business owners to carefully consider what telephone system they should choose as sometimes mobile networks can be unreliable and cause a whole range of problems. The number of systems that a business can choose are endless and include; landlines, mobiles, self hosted VoIP, virtual telephone services and cloud based VoIP. Each one of these options presents its own benefits and drawbacks so it is important for every business to consider the options on the merits of the different systems available and select one which is the most suitable for their business. Some of the factors businesses could take into consideration include:

  • The call volume currently being processed by the business and whether this is likely to change
  • Whether the business has a reliable and fast connection to the internet to rely on VoIP systems
  • If the new telecommunications hardware and software can integrate with existing equipment
  • The features and benefits of installing a new telephone system
  • Whether the business operates in more than one office or are many of the staff based remotely?
  • Is there a PBX system already in place?

The amount of time employees spend in the office may be one of the deciding factors which will determine the most suitable system. Landlines do offer the reliability and quality that you need but they do lack the flexibility that modern businesses often require.

How does a public telephone exchange system work?

The Public Switched Telephone Network is a wired system through which landline telephone calls are made and received and the circuit is based on successful circuit switching. In order to connect one phone to another, a phone call will be routed through a number of switches which operate on local, regional, national or international systems. Connections which are established between the two phones is referred to as a circuit.

telephone exchange

Telephone Systems: A Brief History

To explore how telephone exchange works, in the very early days of the systems, phone calls would travel along copper wire as analogue signals. Each phone call would require its own copper wire which would connect the two phones. This was why the caller would need the assistance of an operator to make a call because it was their job to make the connection. Operators would sit at a switchboard and connect one piece of copper wire to another so that the call could travel to where it needed to go. Long distance calls were extremely expensive because each time a caller made a call they were, in essence renting a very long piece of copper wire every time a call was made.

In the 1960s, digitisation was introduced and manual switching was gradually replaced with electronic systems. Technology has advanced considerably in the decades that followed and now a single wire can manage a number of digital voice signals. This has been further improved with fiber optic cables which enables thousands of calls to use the same line. Nevertheless, even with fiber optic and high bandwidth cables they still require the development of connections or circuits to remain open for the duration of the telephone call.

Private Branch exchanges, also known as PBX are the same but rather than being open to the public, they belong specifically to a business where each employee has their own extension number. Extensions from the main contact number are then routed through the private branch exchange which operates in each business premises. To make things a little more complicated, for international calls, additional instructions are required and the call needs to be routed through a long distance telephone carrier to another carrier in the destination country and then to the specific extension. To indicate a switch in countries, you have to tell the exchange where you want go which is usually determined with a country’s prefix or international access code before you can dial a number.

Public and Private Networks

Public switched telephone networks in the UK are just a small segment of the wider networks that exist throughout the world. These are operated by a local, regional or national operator who provide the necessary infrastructure services to facilitate telecommunications. Modern day public telephone networks consist of telephone lines, fiber optic cables, microwave transmission links, satellites, cellular networks and telephone cables installed under the sea all of which allow telephones to communicate effectively with each other. Furthermore, this network now also includes digital services including mobiles and other types of communication networks which makes it even more complex.

The private network that you will commonly find in a business will switch calls from external telephone lines to internal lines enabling callers to reach a specific extension or department. Private networks are extremely useful for businesses because they eliminate the requirement for each employee to have their own telephone line and phone number which in many instances would prove impractical and costly. Advances in technology mean that businesses can now make use of the internet to make and receive calls through what is known as VoIP or Voice Over Internet Protocol rather than a traditional telephone line. Alongside VoIP there are also several other private network systems which include the normal PBX, to the more advanced which include hosted or virtual PBX, IP PBX and hosted or virtual IP PBX.

The Main Components of a Telephone System

The design of a telephone is extremely simple and has only five main components:

1. Switch - The switch is just that, a switch to connect and disconnect the handset from the phone network. It is normally a small button that is depressed when you replace the phone into its holder.

2. Ringer - The ringer is a small speaker that is dedicated to alerting the owner of the telephone to an incoming call from the network.

3. Speaker - The speaker is the part you put to your ear to allow you to hear the voice of the caller; it works by converting the electrical signals sent from them to sound.

4. Microphone - The microphone allows the caller to hear your voice by converting it to electrical signals that are then sent over the network.

5. Keypad - The keypad allows you to tell the network which available telephone you wish to connect to by inputting the phone's unique code number

telephone keypad

There are a few other electrical components present like the duplex coil, which stops your own voice being heard from your own speaker. But these are not necessary for the phone to work - they are simply additions to make the experience of the call more congenial.

In fact the speaker, microphone and switch are the only necessary components as you can dial by using pulse dialling. Anyone of sufficient age will remember the phones with the rotary dialler that clicked an amount of times commensurate with the number they wanted to dial.

This clicking was in fact just the switch being pulsed, so if you want to dial a four all you have to do is depress the switch four times in quick succession.

So now we know about the telephone, what happens after our voice leaves the phone?

PBX: Internal and External Networks

Telephones are connected to the network via two copper wires, one for the speaker, one for the microphone.

In the business environment, your call is most often passed to a PBX (Private Branch Exchange), a miniature version of the switchboards large phone companies use. The PBX decides if the call you are making is internal or external, and then dependent on this, either routes your call to another phone within your business phone system, or to the external local network.

The external local network is defined by being given a unique prefix or area code. For example, Southend-On-Sea has an area prefix of 01702 - this denotes the local network of Southend and is a definite geographical area. The internal network, on the other hand, will often forgo the external prefix and just use internal extension numbers.

When calling an external number, the external local network is used; the PBX forwards your call to the local junction box outside your business. At the junction box your voice is digitised, meaning that the analogue output that is your voice is converted into a series of ones and zeroes, the language of computers.

This conversion allows the telephone company to transmit hundreds of calls at the same time down a single wire or fibre optic cable, to the local switchboard.


In the past, a switchboard was a large room with hundreds of operators who asked where you wanted to call and then manually made the connection. Today these switchboards still exist and work in practically the same way, apart from the fact that they rely on a computerised system.

Once the switchboard has passed your call on, and depending on its destination, it may take different paths:

Local/National Call - A physical connection to the local network of the place you want to call will most likely be possible, so the switchboard will pass your call to that network which will forward you to the phone you are calling.

International Wired Call - Should you wish to call abroad (for example, France) the switchboard would probably have access to a physical cable laid across the channel or North Sea to pass your call to the local French network.

International Satellite Call - Should you wish to call further afield (for example, Peru) it is unlikely that a physical cabled connection is available. In this case, your call will be forwarded to a microwave transmitter that sends it into space to be reflected by a satellite back to Earth and to a point in Peru where a receiver picks up your call and passes it to their local network.