What is a PBX Phone System?

A PBX (“private branch exchange”) phone system is a telephone network topology used within a company to facilitate day-to-day communications. There are three types of PBX systems: traditional analog, on-premise IP PBX, and hosted PBX.

Traditional Analog PBX Phone Systems 

A traditional analog PBX phone system connects to the public switch telephone network using POTS (“plain old telephone service”) lines. The PBX system manages calls between phones, which are physically connected to the system using copper wiring. Traditional analog PBX phone systems look a bit like something you might see in a hospital (i.e. very complex with lots of blinking lights and incoming/outgoing cables), and they’re usually stored in a special telecom room or closet. 

There are three critical drawbacks — all related to cost — associated with traditional analog PBX systems that have convinced many businesses in recent years to switch to either an on-premise IP-PBX system or a hosted PBX system.

• The first cost-related drawback is that purchasing and installing a PBX system is expensive, and typically runs into the thousands of dollars.

• The second-cost related drawback is that monthly fees are based on usage (both regular calling plus long distance), and therefore it is impossible to have fixed cost certainty. One month the cost could be within the budget, and next month it could significantly exceed the budget.

• The third cost-related drawback is that adding additional lines requires physically laying them outside the office, which is costly (i.e. it’s not included in the price of the PBX system), as well as inefficient.

In addition, because the technology is analog vs. digital, traditional PBX systems cannot support enhanced features such as voicemail-to-email, or high-definition voice calls.

On-Premise IP PBX System

An on-premise IP PBX system represents an evolution from traditional analog PBX phone systems, because it leverages an internet (VoIP) infrastructure to offer advanced features. There are no copper wires to deal with, and calls are routed across the business’s local area network (LAN).

While an on-premise IP BPX system is typically less costly than a traditional analog system — for example, user-to-user and long distance calls are free — the initial CapEx costs are high, and can therefore be prohibitive or unjustifiable for many small and mid-sized businesses. Furthermore, since most businesses don’t have a team of in-house telephony experts, they typically must purchase a maintenance plan that can add thousands of dollars a year to their budget.

Hosted PBX System

Also referred to as a cloud phone system or virtual PBX, a hosted PBX represents the next-generation in PBX technology and design. It enables businesses to enjoy all of the benefits of an on-premise PBX system — including advanced enterprise-grade features, high-quality digital audio and video, integration with systems in the environment (CRM, ERP, etc.), anytime/anywhere mobility, seamless scalability and more — but with no CapEx costs, and no ongoing maintenance or upgrade costs.

Businesses simply purchase low-cost user licenses based on their specific needs (and if desired, affordable IP phones to use with the system), and they’re ready to go. Installation and set-up takes hours instead of days, and the system is secured and supported by third-party VoIP experts 24/7 (who also ensure 99.99% uptime). What’s more, businesses can monitor and customize their hosted PBX system, as well as generate reports, through a secure web-based dashboard.  

The Bottom Line

In light of the above, it’s easy to understand why a growing number of businesses are elevating their PBX to the cloud — and their only regret is that they didn’t make the switch sooner!

For a guided demonstration of our award-winning hosted PBX system that is trusted by businesses around the country, contact the Votacall team today. Your consultation with us is free.

For more information on how to choose the right partner for your hosted VoIP phone system, download our FREE eBook: