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PBX Telephone Systems

This guide will offer an overview of PBX telephone systems, exploring the different options available and how each type of PBX can improve your business’s communications process.
What Is a PBX System?
What Is an IP PBX?
Choosing a PBX System For Your Business
Benefits of a Traditional PBX
Benefits of an IP PBX
Benefits of a Cloud PBX
How Much Does a PBX System Cost?

What Is a PBX System?

PBX, short for Private Branch Exchange refers to a business telephone system that manages both incoming and outgoing calls for the company's users.

By allowing one business workforce to share connections to external phone lines the core benefit of PBX is cost savings, with separate phone lines for each user no longer needed.

Another advantage of modern IP PBX systems is the range of call management features that even small businesses can take advantage of at very low cost. These features include: Auto Attendant, Call Transfer, Autodialer, IVR and Call Forwarding.

PBX telephone System

A PBX system is made up of a number of components:

  • Computer Server - Handles the call switching for both internal calls between employees as well as incoming and outgoing calls to and from external networks.
  • Trunk Lines - Connect the PBX to the external phone network.
  • Internal PBX Lines - Manage phone connections within the company.

As well as these, traditional PBX systems would also include a switchboard through which a human operator was need to manually direct calls. Modern IP PBX systems which will be covered in more detail later in this guide no longer require this manual task with the role undertaken by automated services.

PBXs may also be known as TDMs (Time Division Multiplexers) or EPABXs ( Electronic Private Automatic Branch Exchanges).

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What Is an IP PBX?

With the advent of VoIP or Voice over Internet Protocol, voice data no longer has to be transmitted down dedicated phone lines but can be transferred over TCP IP networks i.e. the very same digital networks that handle Internet data.

An IP PBX, which stands for Internet Protocol Private Branch Exchange, is a PBX system that switches and manages calls using VoIP technology rather than traditional phone lines i.e. utilising the IP data network. A typical IP PBX can also switch calls between VoIP users and traditional telephones, and still connect two traditional telephones in the same way as conventional PBXs do.

A significant advantage of an IP PBX, and VoIP in general, is that it converges voice data and other Internet data (including Instant Messaging, email and web browsing) onto the same network. The upshot is that Internet access, VoIP communicatiuons and even connections to traditional telephones are all handled by a single network connection to each user: it’s flexible, allowing your business to grow and new users added with minimal disruption, and it vastly reduces longer-term operation and maintenance costs.

What is the difference between an IP PBX and VoIP box?

In effect these terms refer to boxes that do the same thing: they both provide call control and access to telephone switching software. VoIP boxes are usually designed to be more ‘plug and play’, and are intended for very small businesses. They are based on Open Standards and offer connection to ISDN or analog fixed line networks. IP PBXs provide more expansion options and are a more scalable alternative for everyone from small businesses to large enterprises.

Choosing a PBX System For Your Business

With the gradual shift towards modern, digital PBX systems there are a number of options in terms of how you implement a private branch exchange for your company.

When choosing a IP PBX the main decision you have to make comes down to where the PBX will be physically located. This means choosing between housing the system on your organisation’s premises, giving you more control or hosting the system with a VoIP provider using their servers in the cloud.

Which option is best for your business depends on a number of factors including budget and size of your organisation. The specific communication needs of your business also impact the type of PBX that will be most beneficial to your company and below we have outlined the advantages of each type of PBX.

Benefits of a Traditional PBX

Benefits of traditional PBX

Traditional PBX are the least complex of those covered within this guide. The private branch exchange is connected to your outside lines with your phone handset then connected to the PBX. When a call is made or received the PBX connects the correct extension to the intended outside line.

  • Reliability – Traditional PBX remain operational even if your computer network/Internet go down. Meaning although these older systems may not as much flexibility or be as feature rich they perform their function of sending calls from one point to another very well.
  • Full Control – The reason traditional PBX perform this function very well is because they designed to be entirely self-contained, fully controlled systems.
  • No Need for New Network Infrastructure – Traditional organisations who have previously had no need for significant web presence and the necessary networks required may find the investments needed to upgrade to IP phones expensive compared to the option of a Traditional PBX.
What are the downsides?
  • Expensive initial installation
  • Technical skill and cost required to maintain and upgrade
When you’re considering moving to VoIP, our suppliers can help you assess your current network capability for VoIP services and work with you to provide the optimum solution.

Benefits of an IP PBX – a hybrid analogue/VoIP solution

Benefits of IP PBX

The primary aim for businesses choosing a PBX system is to make sure that it can be configured with all the latest call cost-saving measures, and be able to work with emerging internet technologies designed to lower call costs.

An IP PBX offers greatly expanded functionality over a traditional PBX system, as it provides audio, video and text communications through TCP/IP over an Internet-enabled network. An IP PBX allows a company to use a single network internally for data and voice.

Perhaps because until fairly recently VoIP was seen as lower quality or less reliable than a traditional telephone system (these concerns have been laid to rest as VoIP technology continues to be quickly developed and improved, leading to high levels of what is referred to as ‘resilience’ in modern cloud phone systems), many firms have chosen to test VoIP in parallel with their existing reliable, but more expensive hardware PBX. This trend gave rise to hybrid solutions: IP PBX systems that have both on-premise and cloud components.

While plenty of businesses and corporations do still use legacy analogue PBX systems while they still can, many are moving to either a hybrid model (using PBXs that incorporate both analogue and VoIP connections) or are moving their communications completely into the virtual domain with fully hosted cloud services.

IP-PBX systems give companies the same features that can be found on a traditional PBX system, but with the added cost savings that can be achieved using VoIP-based services.

  • Significant cost savings using VoIP providers, particularly for long distance and international calls. One of the major reasons to switch to an IP-PBX telephone system for your business is the cost savings you can achieve. If you have a number of sites, then by using these systems calls between branches or offices can be completely free. If you make a large number of international or long distance calls using the internet for these calls is significantly cheaper than using the regular phone network.
  • IP PBX are scalable and can easily handle large numbers of lines and extensions. Once installed, which is an simple process, the system is easy to scale up or down in size as required depending on the route your business decides to take. The main reason for this is there is no need for expensive, bulky hardware with costs significantly cut as well.
  • Management and configuration is easier with a web-based dashboard. Because the IP-PBX system is computer based it can be linked with your customer records, which increases the productivity of your employees, and will often provide better service for your customers.
  • Typically, you can benefit from twice as many phone system features for a much lower cost

Benefits of a Cloud PBX

Benefits of Cloud PBX

A cloud PBX system, also known as a hosted PBX or virtual PBX, offers many of the same services as an IP PBX. However Cloud PBX can provide even more comprehensive feature sets and are also easily integrated with other software platforms. The key difference is that rather than being located on-premise, the PBX is stored and maintained entirely off-site by the provider of your choice on their computer servers, meaning that there is no hardware needed that the user must buy or install.

This type of PBX therefore eliminates the need for trained personnel to maintain PBX hardware within the company, as VoIP for business is becoming more application-based, evolving from hardware systems to software that is leased in a cloud model. Think of a VoIP PBX in terms of an application, rather than as a piece of equipment.

Hosted PBX systems are often employed by smaller companies and those with multiple employees spread out over a wide area or multiple office locations.

The VoIP PBX as an App

With the changeover from analogue telephony to VoIP showing no signs of slowing, two related PBX trends have emerged:

  • Elimination of hardware – on-site hardware has fast become a thing of the past as services are delivered directly from the cloud.
  • IP communications now more application-oriented – modern cloud PBX acts almost as an app, subscriptions are managed and delivered virtually with hardware equipment no longer needed.

It is also important to consider that a cloud PBX can also still support a hybrid phone system model, this means you can continue to use old analogue phone models even with a modern PBX system.

Features – Traditionally, the PBX switched telephone systems hardware has been out of reach of smaller organisations due to the cost which is due to the system’s feature rich capabilities but now with the emergence of cloud technology (otherwise known as hosted or virtual), however, this is no longer the case. Hosted solutions work on the premise that larger scaled technology, such as IP BPX, is hosted in a virtual environment and then sold of as a subscription based service, or in this case, platform.
  • All IP PBX phone systems can include options such as conference calling, extension groups, call forwarding, call waiting, and call transfer.
  • Some of the more unusual features these systems offer are fax to email, automatic speech recognition and CRM integration.
  • Voicemail transcribe – Another popular feature is receiving voicemail transcribed in an email or text message.
  • Video chat – Users can also video chat in VoIP in a softphone client on a desk or video phone without the need for a complex telepresence system. And, voice can be integrated with other business applications. For example, a salesperson connects their phone to a customer relationship management system and can access their notes from previous conversations when talking to a customer.
  • Flexible and intelligent call routing – For example, an IP phone can be programmed to ring on a cell phone when an external call is received, but route to voicemail for other calls.
  • Work from anywhere – An IP-based PBX service can view the user from anywhere based on IP protocols, so the user has a virtualized experience and distributed voice calls. An IP service associates a user with a phone number and can register any number of devices. As far as the PBX is concerned they just need to know who you are and where to send the application. It’s a huge benefit to take your phone with you and work from home or an airport.
  • Unified Communications – Now that the PBX is an app, I can view and access it in multiple ways to communicate: instant messaging, data sharing, video and voice.

How Much Does a PBX System Cost?

The cost of a PBX system will vary as it is always based on the number of users, extensions and feature set selected.

There are also two separate types of costs to consider: installation and setup costs, and ongoing monthly service charges. For example, while buying and installing an on-premise IP PBX server will be a larger up-front investment, you may save longer-term with slightly lower monthly costs over several years than you might get with an equivalent cloud PBX service. This is not an absolute rule, as each case will be different depending on the communications requirements and nature of your business.

We suggest you get quotes from trusted providers who have the expertise and experience to quickly and accurately assess your needs and build exactly the right PBX system for your business.

PBX System Installation

When choosing a PBX and assessing installation costs, businesses need to consider the following points:

  • The number of phone users in the company and their current or anticipated usage
  • How many sites need to be connected, and the amount of call traffic between them
  • The location of the main system and its interconnections to other systems
  • Which call plan best suits your requirements
  • When are the peak periods during work days and weeks for network traffic

If you are looking to implement VoIP for inter-office communications you should also check that each office location has sufficient network technology to deliver the appropriate levels of service, in terms of overall bandwidth, data transfer speed and reliability. Each site should have:

  • At least 10/100 megabit Ethernet LAN (Local Area Network) switches, that interact with and interpret quality of service features with routers
  • Cat 5 Ethernet cabling infrastructure to support 100 megabit data rates (and power for IP phones if you’re using them).

You should also bear these factors in mind when considering networking for VoIP implementation:

  • The bandwidth in your LAN (Local Area Network) may very well be greater than in the WAN (Wide Area Network), so you will need to factor in the appropriate headroom to ensure smooth operation,
  • Your router and switch networks should have enough free IP addresses available to support IP phones, and the routers should support voice compression
  • Resilience refers to the levels of reliabilty and security in network systems, particularly in terms of backup measures should primary power to the system be lost. Businesses should have a standby power system to maintain a phone network if there is a mains power failure.

PBX System Suppliers

In the UK, Cisco,NEC, RingCentral, Vonage, Siemens, Fujitsu and Avaya are some of the leading brands that can help small-to-medium businesses in particular get the most out of VoIP and cloud PBX technologies and applications, providing platforms that can deliver a host of productivity and efficiency-enhancing features as outlined in this article.

Telephone Management System Features

Modern VoIP services incorporate advanced Telephone Management System (TMS) features: tools that enable administrators to track, create reports and control communications activity within a business.

TMS features provide business owners and managers with streamlined insights into where money is currently being spent, what impact the expenditure is having on the business, and how future communications expenditure could be best allocated to maximize revenue and reduce costs.

Call Log & Reporting – several forms of call data will be automatically recorded in an IP PBX or cloud PBX system, which can be used directly to pinpoint where savings can be made.

  • Incoming or Outgoing call
  • Caller ID (when available)
  • Extension number / User ID
  • Time of day
  • Number dialled
  • Trunk used (which line the call went out on)
  • Cost of the call

Reports that can be instantly created:

  • Top 20 most expensive calls
  • Top 20 longest calls
  • Top 20 most-dialled numbers
  • Calls exceeding a certain length of time/cost (e.g. > 10 minutes/ > £10.00)
  • Report per extension/user
  • Departmental reports
  • Abandoned call reports
  • Monthly total cost summary reports

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Advantages of a Cloud PBX System For Small Businesses

The main advantages of cloud PBX systems for small businesses are:

  • The cost of incoming calls is minimal or free
  • The system has a very minimal equipment footprint, not taking up a lot of office or storage cupboard space for bulky servers and other hardware
  • Multiple extensions can share a single line
  • Once installed it’s relatively easy to expand or upgrade a cloud PBX system, with minimal workplace disruption or installation/maintenance costs.


When choosing a PBX, make sure the system is scalable and can be modified to adapt to future technology changes.

Further Information

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