What is a PBX phone system?

A PBX phone system is just as useful for worldwide organisations as for one-person businesses. Because who answers your calls can have a decisive impact on your business. A PBX conveys a serious image of the company and is a smart way to streamline operations and save money.

The PBX – from stationary and clumsy to cloud-based and user-friendly

A PBX phone system (Private Branch Exchange) or telephone exchange is an organisation's private communication network that allows the caller to navigate menu options and select extensions. With a PBX, the employees can communicate with each other via the internal network and receive calls via the public telephone network PSTN (Public Switched Telephone Network) on a so-called ISDN protocol (Integrated Services Digital Network).

3 types of PBX phone systems

PBX phone systems can be divided into analogue, digital, and cloud-based. The analogue PBX is the traditional one. After that, a digital and a cloud-based version has been developed, and all have specific advantages.


Regardless of what type you choose, it's about strengthening internal and external communication with your customers by, among other things, connecting callers to the correct department or person or setting up a voicemail that announces your opening hours. A PBX or switching system handles and connects calls, allowing you to offer multiple telephone lines connected to the public fixed telephone network or a VoIP network.


1. The analogue, traditional PBX

The first PBX phone systems were a further development and an automatic version of the manual PBXs, where a telephone operator handled all forwarding. The PBX gathered many extensions from the outside into a single internal line, from where they could then be connected to the employees – without everyone in the company needing their own external extension. With a company PBX, it became possible for more people to have access to a limited number of external connections at a lower cost. The original purpose of a PBX was to get as much as possible out of a limited number of external connections at as low a cost as possible.


The analogue PBX system requires an on-site physical server, and all connected phones must have fixed lines. These are complicated installations that involve a significant initial investment. Many companies still use these older, cumbersome gears because they were so expensive to purchase that they hold off replacing them for the longest time. The analogue PBX is also costly to maintain, and special skills are required to administer and make changes. If you have an older PBX, it may be worth looking into because it may cost more than you think. Physical PBXs are also vulnerable, as creating redundancy with an old system is more challenging.


Fixed PBX telephone systems are less common today as the alternatives are more cost-effective, have more functions, and do not require the same physical space. In addition, we are increasingly moving towards the cloud, and more people have stopped using fixed telephones altogether, which means the analogue PBX is not as future-proof as a cloud PBX.


2. The digital hybrid PBX that uses SIP trunks

The traditional telephone network (PSTN) is based on copper wires from a local telephone company to various buildings. It works by connecting telephones via jacks to the fixed telephone network. The PSTN is stable but has mostly stayed the same over the years. Several new technologies have seen the light of day in line with increased digitisation. New channels have had to be integrated into the PBXs, and the Internet has made more pristine communication possible. First up were the VoIP switches and hosted switching systems, which offered greater flexibility and significantly lower costs than the old variants.


A digital exchange or so-called hybrid exchange combines analogue and digital VoIP technology. SIP trunking technology is used here. That means that you convert your fixed telephone exchange to a cloud-based system. That gives you access to more functions, and you can lower your telephony costs. You can thus add more phone lines without installing more cables (which you have to do with a fixed PBX).


3. The modern hosted cloud PBX

Today's most modern and popular option is a hosted PBX, also called a virtual PBX, cloud PBX, or IP PBX. A cloud PBX allows you to manage everything online in a browser, app, or softphone. The company can work more flexibly as you access everything in the cloud instead of going via a physical server. That means you can efficiently work remotely if you have an internet connection.


A hosted PBX is scalable, you can quickly get started, and no internal maintenance is required as it's included in the monthly cost you pay. In addition, you easily integrate your cloud PBX with your CRM system and other functions. Read more about what a cloud PBX is and its benefits.

Buyer's guide  How to choose the right cloud PBX  Read the guide here

Why smaller companies need a PBX too

If you run a small company, you might think that it makes no sense to have a PBX, as it has worked well so far, just using your personal mobile number. But if you want to aim higher and present your business more seriously, you need a PBX.


Using a PBX system sends positive signals to your customers, making you appear as a more sophisticated, serious company. It also becomes much easier to handle the calls that come in. If you are busy, you simply record a message to your customers, or you can transfer the call to a colleague. In this way, you always ensure that those who want to reach you get help.


You will see an enhanced customer experience with a PBX, and you can work more productively – even when you're away working remotely. If you run a mobile-only business, cloud-based PBXs are an agile and cost-effective solution built to handle mobile-only. Read more about how you choose the right supplier as a small business owner.

In summary

For as long as telephony has been a natural part of our working lives, the many incoming and outgoing calls have been challenging. Because a missed call can be expensive, depending on the industry you work in, the consequences of a missed call can be more or less fatal. Regardless of industry, you hardly want to risk missing that important call because the line happened to be busy.


Companies of all sizes, from smaller ones to those with thousands of users in different countries, need a PBX phone system. The best solution is usually to invest in a PBX service that is part of a larger, complete communication platform with all the functions your business needs. There, telephony, PBX, contact center, integrations, and video calls come together – in one app. A complete solution for communicating with colleagues and customers, smoothly gathered in the same platform, presented on one invoice.

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