Understanding the Basics of PBX, IP PBX, VOIP Phone

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Understanding the Basics of PBX, IP PBX, VOIP Phone


PBX stands for Private Branch Exchange. PBX describes the system within an organisation or company that is used to forward calls to the correct person or department.

In the past, PBX was done manually by staff physically connecting two phones with a cable (referred to as switching). An operator would answer, ask the caller who they needed to speak to, and then connect the call.

Newer advanced PBX became known as PABX (Private Automatic Branch Exchange). With this system, all the switching could be done automatically. A recorded message would answer and readout options, to which a user can reply by pressing a button on their phone. This is still commonly used today. The introduction of Advanced PBX offered large call volumes and very fast switching speed by using Time Division Multiplexer (TDM) technology. It also created the possibility for ‘hold music’ and voice message playback.

PBX is very efficient and reliable. It will continue to work even in a power outage, but is limited to desk phones – no mobile. It offers better audio than digital replacements.

These days the terms PBX and PABX are used interchangeably and mean the same thing.



With the invention of the Internet, IP (Internet Protocol) PBX became possible. This involves using a computer on the Internet to transmit calls and using a serial connected (usually USB) phone or headset to listen and talk. The signal is converted from analogue to digital in order to transmit over the IP network and then converted back to be played as audio on the other end.

IP phones with a static IP address can also be used and work over a network in the same way as any Internet-connected computer works. Calls can also be made to normal analogue phones, with the signal being converted back to analogue at the IP PBX server and then sent out over the normal PSTN (Public Switched Telephone Network) line.

IP PBX has lower operating costs than traditional PBX as it can use existing network infrastructure without needing additional cabling and switches installed. However, the initial equipment and installation can be expensive. IP PBX introduced a broad range of new functionality including Call Forwarding, Call Cascading and Voicemail-to-email.

IP PBX can be affected by power outages if the server goes down, but still maintains a physical connection to the traditional PSTN telephone system.



VoIP (Voice over IP) is very similar to IP PBX in that it uses networked devices with IP addresses. However, VoIP systems are usually cloud-based as opposed to having a locally hosted server. While this provides greater mobility at lower cost, it requires very fast, reliable Internet. In the event of a power outage or loss of Internet, no communication is possible.

VoIP provides all the advantages of IP PBX, as well as the possibility to integrate calls with applications such as Salesforce and other CRM software. This gives users the ability to track, record and use snippets from conversations in very versatile ways.

Due to its incredibly low cost, VoIP has become the most popular option for small businesses and startups, as well as large corporations. In addition, VoIP makes it possible to have ‘local’ telephones numbers in multiple countries, giving customers the ability to call from anywhere in the world without the cost of an international call.


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