How Does an IP PBX System Work?

Posted on: 2016-02-15 | Categories: VoIP VoIP Providers VoIP Services

For consumers taking advantage of VoIP calls is pretty simple. There are many companies that provide hosted VoIP services and most people can even continue using their old number with the new Internet calls. Some vendors offer business plans for freelancers and contractors that are generally enough for small businesses with 1 to 5 people. But as an organization expands, they need more sophisticated technology for managing voice communication.

With POTS, it usually meant purchasing and installing a PBX system. Most of us are familiar with these enterprise technologies which allow organizations to share lines efficiently. Employees can call each other simply by dialing a three or four digit extension number and there is no need for the business to have one external line for each user. Typically each telephone within the organization is connected to the PBX through wires, which is in turn connected to the external PSTN for routing calls.

What is IP PBX?

Since VoIP calling provides better features for lower prices, IP PBX systems have been gaining market share at the expense of older technology. An IP PBX consists of a server and several SIP endpoints that are registered on it. These endpoints may be physical phones, computers running softphone applications on mobile devices with SIP/VoIP apps. The server has a database of all endpoints, with addresses and other details that are used to establish connections.

How IP PBX systems work

Broadly speaking, internal calls are directly routed to the SIP address of the destination party. There is no need for the call to pass through the IP PBX server once the initial connection has been established. This means all voice traffic travels directly between the two endpoints, ensuring that the server will not become overloaded as the number of concurrent calls increases.

External calls are redirected to the VoIP gateway which connects the IP based system to the external PSTN. These gateways may be incorporated into the PBX and maintained by the organization or they may use one that is provided by an external vendor. The VoIP gateway itself can take many forms – it may be a standalone piece of hardware or an extension card that can simply be plugged into the server.

In fact, the IP PBX itself need not even be a separate physical device. Many organizations use IP PBX software to create a virtual server on an existing computer. There are quite a few proprietary solutions and open source applications that allow enterprises to take advantage of VoIP calling without requiring much in the way of equipment. This makes it very easy to test VoIP calls. Over the long-term, businesses can then upgrade their systems slowly for better reliability and integrity.

Hosted IP PBX systems

Since the IP PBX systems is not required to be a physical device or even located in the same building as the organization, a new model of deployment has become popular. Most organizations aren’t experts at maintaining their own phone systems or would like to eliminate the hassle of doing so. Instead of the IP PBX being a virtual one that is nevertheless still installed on a computer on the premises, hosted IP PBX services have gained prominence.

Under this model, the IP PBX is owned, operated and located at the vendor’s site, instead of the client. All PBX services related to call routing, provisioning new lines etc. are provided online, through the cloud. The situation offers benefits for both clients and the VoIP service providers. Enterprises are able to focus better on their own business instead of managing the phone system. Vendors on the other hand are able to take advantage of cloud architecture and economies of scale to provide phone services cheaply to a number of clients at once.

On-site versus hosted IP PBX

This is a common question that businesses face in considering the upgrade to VoIP. Unfortunately there is no clear winner since each option has its own pros and cons. Most experts recommend that smaller businesses should opt for hosted services and larger organizations can manage on premise systems. But this is by no means a hard and fast rule. If a small business needs the control and customizability of their own IP PBX or a large organization simply prefers the hassle free option of cloud VoIP, those alternatives can work well too.

If an enterprise can afford the investment, on premise systems are generally a better solution as they reduce the cost per call. Over the long-term, it is also cheaper than continually paying external vendors for access to their services. It is an especially good choice if the organization handles large call volumes on a regular basis. Nevertheless it does require time, financial resources and the availability of in-house expertise (alternatively the ability to hire experts and manage them). So it is not surprising that more organizations are choosing the hosted IP PBX model instead.

To the end-user, an IP PBX system does not appear any different from a more traditional PBX box. With both these systems, an employee can simply pick up the phone to make or receive calls. But what goes on behind the scenes to enable the call management functions is completely different. IP PBX boxes are based on modern, digital standards and are more similar to the way the Internet functions. They are better aligned with the way businesses function and employees work in today’s economic environment.