History of PBX Phone Systems

By Ryan Ayers
Updated: February 16, 2012

Private Branch Exchange (PBX) telephone systems have been in use in business since the early 1960’s, and have evolved over time to better provide for the needs of businesses as they adapt and grow with new technologies and changing methods of business communication. Although a true PBX system, in the traditional sense, is rarely seen in businesses today, the underlying principle for our modern telephone systems is based on these early business telephone networks.

Early PABX

Early PBX exchanges were referred to as Private Automatic Branch Exchanges (PABX), and were implemented in the 1960’s. These systems were adopted because they streamlined business operations and reduced costs by allowing a telephone network to be dedicated to a single business or entity rather than being administered via telephone providers.

Early PABX systems were revolutionary in that they allowed businesses to place internal calls without having to use an actual phone line. This removed the need for a receptionist to route all internal calls from one extension inside the network to another. This system also allowed outside lines to be freed up from internal traffic, meaning that businesses needed fewer lines. This system significantly increased functionality and reduced communications expenses for many businesses.

PBX Takes a Leap Forward

By the 1990’s, PABX telephone systems had begun to be referred to as Private Branch Exchange (PBX), a term which persists today. Technology had evolved and newer systems were available, but there was pushback from organizations that didn’t want to purchase an entirely new system at significant expense each time PBX technology improved.

This changed when PBX systems became more flexible, and the idea of giving business consumers the ability to add ports or cards to increase their network ability and functionality caught on. Businesses could now modify or expand their telephone systems without having to begin anew each time additional features were needed.

By the late 1990’s, features such as autoattendants, limited data integration, and increased telephony applications were becoming commonplace and ideas about using packet switching technology and hosted providers began to take root. These would be the precursors to our modern VoIP PBX communications solutions.

VoIP Takes Business to the Next Level

Packet switching technology for data transmission had been in use for some time when early adopters of Voice over Internet Protocol (VoIP) ideas began to see the merits of using this same principle for voice transmissions. Businesses were already set up to transmit large amounts of data, and it was clear that technology would continue to find more functional and rapid mechanisms to accomplish this.

VoIP began to become a commonplace term in business communications and businesses soon learned that they could increase the functionality, automation, and reliability of their communications solutions all while significantly decreasing telephone expenses.

What VoIP Means Today

Businesses today have many choices when it comes to identifying and selecting the ideal communications solution. Business telephone systems are almost entirely VoIP based, and businesses now have the option of purchasing on-premise systems specific to their company, or a variety of service-oriented packages from hosted providers.

Modern VoIP solutions allow businesses to function more comprehensively and efficiently and at a lower cost than any of the early inventors of traditional PBX technologies would have imagined possible. The basic principle still lies in connecting the many facets of a business, but the mechanics have allowed for an ease of use and implementation that wasn’t possible until recently.