What is PBX?

By Neil Zawacki
Updated: September 09, 2011

You may have heard the term ‘PBX’ when researching office phones and wondered what exactly it means. This article will provide information about the technology and how it can be used at a small business.

A PBX (Private Branch Exchange) is a telephone switching system that can manage and connect multiple phone lines to each other without having to deal with the telephone company. They can also provide basic information to the administrator like the overall length of the phone call.

This might seem similar to a switchboard, but it’s not the same thing. A switchboard connects the private branch exchange to any outside callers. The PBX is responsible for all of the internal operations within the phone system. Each person receives an extension number instead of a phone number, and simply dials ‘9’ if they need to contact someone outside of the company.

The main benefit of a PBX is that it significantly lowers the cost of internal phone calls within an organization. The PBX handles all of the circuit switching, so you don’t have to pay the standard fees to the telephone company. The technology is thus quite popular among small businesses that need their employees to regularly contact other people working at the company.

A PBX can also provide access to a wide variety of special features. You can find out who’s calling your business through caller identification, put a caller on hold if you need to look up information, and make conference calls to other people who are within the organization. Many of them also provide the ability to record phone calls and have voicemail for employees.

Another advantage of a PBX is that the administrator can decide which phone numbers can be dialed within the system. This helps to prevent users from accidentally dialing international phone numbers or 900 numbers.

PBX’s used to require special phones in order to work, but are now compatible with just about every type of phone available. You can use a VoIP phone, mobile phone, or landline and still be able to connect to the system.

The main drawback with a PBX they that tend to be quite costly. A standard PBX (one that can handle 75 extensions) will generally cost somewhere between $1000 and $10,000. This price rises further for organizations that need a greater number of phone lines – there are PBX’s that can handle 20,000 or more users. The benefits of a PBX are notable, however, and they remain used to this day.

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