PBX - 101

By Robin Wilding
Updated: February 08, 2011

While PBX may sound like a stock exchange symbol it is actually an acronym for a complex phone system called a Private Branch eXchange. A PBX is an intricate privately owned and operated phone system that connects multiple lines and extensions with the outside world. Phone companies previously ran these systems but as individual companies have grown into large entities they began purchasing their own switchboards and exchanges. As technology advanced, so did switchboards and the human-driven systems became completely automated. Enter PBX.

A PBX system is a complex network hardware and software solution that routes external calls to internal extensions. PBX systems run on switches and other hardware in combination with feature-rich call-routing software.

The main functions of a PBX are to:

  • Create and maintain internal voice communications.
  • Connect incoming calls from a single phone number with corresponding lines and extensions.
  • Route outgoing calls.
  • Provide stats and metering.
  • Allow for a menu of call options.
  • Record and provide access to voice mail messages.
  • Provide for an array of calling features.


The features of a PBX system can include: auto attendants, call-blocking, call accounting, call parking, call transfers, call waiting, direct inward dialing, do not disturb functionality, customized greetings, call-blocking, automatic ring back, interactive voice prompts and responses, night services, hold music, voice mail message broadcasting, welcome messages, and more.


While many companies are still using existing hardware-based PBX technology, the most modern form of a PBX is an IP-based PBX. An IP-PBX, or Internet-Protocol Private Branch Exchange, offers the same features as that of its hardware-based counterpart but it does so via the Internet (a concept called Voice over Internet PRotocol, or VoIP). This new ability to route calls via the Internet instead of traditional phone lines is becoming increasingly popular as it requires less hardware implementation costs, needs little to no maintenance and can be a scalable and hosted solution.

Most companies have plans to migrate to an IP-PBX as they are solutions that can grow (or shrink) with your company. They have higher ROI in the long term and very little initial expense. The cost of using a VoIP solution is also significantly cheaper than renting individual lines from the phone companies.

Benefits of a PBX System

The benefits to a company of using a privately hosted phone system as an alternative to using a phone company goes beyond simple cost savings. A PBX system can also provide for essential business intelligence features that can include remote user access, remote running of the software, a plethora of feature-based options and important control and monitoring tools to determine exactly how your phone system is being used (or misused).

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