PBX vs. VoIP

A Description and Overview of the Pros and Cons of VoIP vs. PBX

By Kevin Stewart
Updated: February 07, 2011

Telecommunications needs are as varied as businesses are, and choosing the right features at the right price may seem like a daunting task. A small business looking for a solution to host multiple incoming, outgoing and interoffice calls first has to choose between a traditional Private Branch Exchange, or PBX, and VoIP technology.

Here we present an overview of the pros and cons between these two choices.



The acronym PBX stands for Private Branch eXchange. In legacy telephone systems, the term PBX was used to distinguish private business systems from common carrier or public telephone systems. Early PBX systems used operators to manually connect incoming and outgoing calls. Today, any private telephone system with multiple lines can be called a PBX system.

Traditional PBX systems were only compatible with the Public Switched Telephone Network (PSTN). In the current business telephone market, many PBX systems are compatible with both PSTN and Voice over IP (VoIP) technology. These are sometimes referred to as hybrid systems, and they have the advantage of managing calls for either PSTN or VoIP telephones.

PBX systems can offer many useful features, including auto attendant, auto dial, call hold and forwarding, call waiting, and direct inward dialing (DID). Managing these features on PBX systems can be technically challenging and involve proprietary hardware and software changes, while most VoIP systems have streamlined interfaces that make this task easier.


A PBX system takes all of the phone lines in a business and links it onto one central platform. PBX solutions generally offer technical support for users, but initial implementation and installation can be costly. Switching to a PBX may require purchasing equipment, such as telephones, which impacts costs.


Similar to VoIP solutions, PBX systems offer packages for a base number of users. Additional lines and additional users increase costs. Future scaling with PBX may require the purchase of additional equipment.


PBX systems offer all the functionalities that a business would need—from voicemail to call-waiting and more.

Call quality:

In general, call quality is good with PBX systems and does not present some of the problems that a troublesome internet connection can with VoIP. PBX systems protect sensitive information through secure phone lines and back-up batteries ensure communications in the case of power outages.


Depending on the specific needs of a business, a traditional PBX solution can be more costly than VoIP, with variables such as call management, installation, additional lines and features all impacting total costs.



There are features that VoIP systems offer that are not available in other technologies. Voicemail and fax integration with email are examples of VoIP only features that are becoming standard business features. The ability to receive voicemails and faxes through email can greatly improve productivity and responsiveness for any business. VoIP systems can also include mobile and text messaging capabilities that are not part of the standard PBX feature set.

VoIP systems are more flexible also. Adding lines and users involves making a few changes in a web-based interface, while in a PBX system these may require hardware and software updates. VoIP systems are designed to be scalable and do not require hardware upgrades to add lines or users.

VoIP also has the advantage of decreased calling costs. Because VoIP does not use the PSTN to route calls, the costs of using the traditional telephone network is bypassed. In some cases, such as toll-free services and dedicated long distance, this cost savings is dramatic.

Some businesses have been reluctant to adopt VoIP systems because of concerns over call quality and consistency. With the recent improvements in broadband technology and digital communications, these concerns have effectively been eliminated. Today it is very difficult to distinguish between the quality of a VoIP call and a call made over the traditional telephone network.

When choosing between traditional PBX and VoIP, it is important to determine which features and capabilities are required, along with operating costs over the long term. After a thorough review of these requirements, each business can arrive at the best choice for their situation.


Hardware demands including telephones, tend to be less costly than those required for PBX.


VoIP systems are generally designed with scalability in mind, allowing businesses to add lines with relative ease and minimal added equipment costs.


VoIP offers all the features of traditional phones with added capabilities like call forwarding to the desktop and mobile devices.

Call Quality:

VoIP systems come with some risks including the unpredictable reliability of internet connections that impact voice quality. Call quality is getting better all the time, but it is not always necessarily as secure as a hard phone line.


VoIP is generally touted as the cost-saving telecommunications solution that combines incoming, outgoing, local, long-distance calls with internet. Call management with a hosted VoIP solution may add to the final bill, and because business needs can vary widely, it's often difficult to find one price that fits everyone. Business buyers should seek customized quotes and compare these with a PBX equivalent when making the choice for a telecommunications solution.


Assess your company's telecommunications needs to see if PBX or VoIP is the right choice. Contact vendors for personalized quotes to meet your feature and scale needs.

Featured Research
  • Is Your Phone System Meeting the Needs of Your Workforce?

    When was the last time you evaluated the performance of your current business phone system? For most people, the answer is too long ago. Phone systems are one of the most overlooked tools in business, even though they’re also one of the most important in terms of employee productivity. more

  • Why are Companies Still Using PBX?

    For years, all kinds of businesses depended on Private Branch Exchange (PBX) phone systems to help facilitate direct, line-to-line communication. Over the course of the past decade, however, Voice over Internet Protocol (VoIP) technology quickly became the go-to resource for brands. more

  • Top 15 Reasons You Should Upgrade to VoIP

    While more businesses make the switch to VoIP every single day, there are also many that choose to stay with the system they are used to.The rationale is almost always the same. You don’t want to shake things up when what you are already using is working. more

  • [Infographic] 16 Mistakes to Avoid When Buying a Phone System

    Choosing a phone system for your business isn’t as easy as it looks. Most people learn this the hard way. You choose a new system, and everything seems fine. Until it isn’t. In hindsight the problems always seem obvious, yet countless businesses fall into the same traps every year. more

  • What You Need to Know About VoIP Security

    No matter the industry or area of expertise, a strong VoIP system is the perfect tool for any business looking to take both its internal and external communication to the next level. more