What is a VoIP PBX System?

The Plain Old Telephone System – frequently abbreviated to POTS – is an integral part of our personal lives as consumers. It is what we use to stay in touch with friends, family and acquaintances. The phone system is also the backbone of enterprise communication that enables business owners, managers and employees to conduct daily transactions and workflows.

In spite of the fact that it has been around for decades, not many of us are familiar with the intricate details of how the phone system works or what happens behind the scenes when we make a phone call. So when we talk about VoIP, it remains a mystery to many people. Most users don’t know how or why it is innovative or its advantages. In fact, the average user doesn’t care either.

Nevertheless, it is imperative for business organizations to understand VoIP technology and how it can be useful for increase in productivity or efficiency. In order to better understand how VoIP works, let us first take a look at the PSTN and PBX systems that are used by the vast majority of businesses.

What Is a PBX System?

Most people have heard of PBX systems and are vaguely aware of how they work. Small businesses that have only 3 to 5 people may be able to manage with a few direct lines provided by the phone company but it can become very costly to provision hundreds of lines as the enterprise grows. A PBX or Private Branch Exchange is a phone system that is used within enterprises to share telephone lines between employees.

The PBX box can connect employees to one another on local lines (internal calls) and allows users to share a certain number of external lines for calls to entities outside the enterprise. The hardware is owned and operated by the business, rather than the phone company. Initially, PBX boxes used analog technology and required human operators to connect calls. Later they were upgraded to to use digital signals and the human operator was replaced with computers for automatic switching.

The business is connected to the PSTN through one or several trunks (a collection of multiple phone lines). These telephone lines required copper networks to carry voice signals and used circuits to connect callers on both ends.

What Is a VoIP PBX System?

Now that we know what is a PBX system, it is relatively easy to understand VoIP PBX systems. Instead of being connected to the phone company through copper lines, the business is connected via SIP trunks. These trunks utilize packet switching technology to route phone calls over the Internet rather than PSTN. The VoIP PBX box eliminates the need for a separate network dedicated to voice.

Phone calls can be sent over data networks just like any other piece of media – text, video, documents, images etc. Basically, the PBX system utilizes VoIP technology instead of relying on the PSTN. The hardware is also frequently referred to as IP-PBXs or simply VoIP systems. Since not everyone has upgraded to VoIP, these systems can connect to both standard phone lines and SIP trunks. Additionally some organizations may require regular landlines for certain purposes such as faxing, as interfaces to security systems etc.

Why Is It Better?

VoIP PBX systems are a significant upgrade from the older generation of hardware. Many enterprises have switched to VoIP primarily to reduce costs. There are many ways to reduce phone related expenses through VoIP PBX boxes:

Low cost long-distance calls

The majority of the call travels through the enterprise data network or the public Internet and touches the PSTN only at certain points. This means the company does not have to pay exorbitant rates for international calls.

Free calls between employees

For users of the enterprise, calls to colleagues within the same company are completely free. There is no need for the business to monitor expense accounts or track the number of minutes being used by each employee.

Eliminate multiple networks

There is no need for the organization to build, implement and maintain two separate networks that serve essentially the same purpose. Nowadays no business can function without an Internet connection and enterprise data network. So why pay for separate phone lines when voice calls can be routed through the data network itself?

Reduce cost of labor and expertise

Most VoIP PBX systems come with graphical user interfaces and web access that make it easy for the organization to maintain. Moving users between locations, adding new employees or deleting unnecessary numbers can be accomplished in a few minutes, instead of waiting for the phone company to do so. This means the company does not have to hire and pay experts to make changes to the system, network or other equipment.

Of course the benefits of VoIP PBXs go beyond just reducing expenses but cost and ease of maintenance are the primary reasons why most organizations have already switched or are looking to switch to VoIP in the near future.