What is PBX and How it Works

Wondering what is a PBX? How does it work? Private Branch Exchanges have been an integral part of business communication for decades. These boxes allow enterprise users to share common resources such as phone lines, instead of having to install a separate line for each employee or desk. The term PBX might sound old-fashioned but organizations use them even today as the backbone for enterprise voice communication.

What Is a PBX?

The basic structure of a PBX consists of lines and stations. Lines are simply connections to the PSTN that are supplied by a service provider. Stations are endpoints such as desk phones, fax machines or credit card terminals. Without a PBX, the business might need to purchase and install 200 separate lines if it has 200 employees. Calls between users in the same office are also charged for minutes just like external calls.

By installing a PBX system, the business is able to improve efficiency and save costs. The box enables employees to call colleagues simply by dialing a three or four digit extension number. These local calls are not charged and are completely free, ensuring that there are no impediments to productive collaboration. The PBX allows users to share external lines as well i.e. the company may only purchase 20 – 30 lines that can be shared among the 200 users.

The system works because all 200 employees are not likely to make phone calls at the same time. The number of lines puts a limit on the maximum number of simultaneous calls and how many to purchase will depend on the business needs, call volume and history. For instance, a call center will need more lines than a retail store.

Components of PBX System

A PBX generally includes:

1. A box, cabinet or closet that serves as a housing for the internal parts
2. Switchboard console for operators to connect incoming and outgoing calls
3. Controllers/computers for data processing
4. Trunks or lines to connect the PBX with the PSTN
5. Cards for logic, switching, power and other necessary hardware needed for PBX operation
6. Endpoints in the form of desk phones, fax machines, credit card terminals etc.
7. Power supply
8. Any additional devices required to add functionality such as voicemail, caller groups etc.

The Evolution of PBX Systems

The earliest PBX systems required human operators and were also referred to as switchboards. When an outside call came into the company, the caller could ask for a department or a particular person and would be connected to them by the operator. Similarly if an employee wanted to make a call, the operator would connect them to an available external line. If an organization had high calling volume, dozens of operators were needed to handle all the calls.

Over time, these manual switchboards were replaced with electromagnetic and then electronic solutions. The latest incarnation of PBX systems can handle IP telephony and connect IP desk phones or other endpoints to SIP trunks instead of the more traditional PSTN lines. These systems are called IP PBXs.

On Premise Vs Hosted PBX

The PBX system may be located in the office of the organization (on-premise) or the service provider (hosted). Although the terms on-premise and hosted PBX have become popular with the advent of VoIP, the concept has existed even for landline phones.

Larger corporations generally purchased and maintained their own PBX solutions while smaller companies could opt for the centrex system. This meant that the PBX would be located at the offices of the service provider, freeing the client from the hassle of maintenance.

Today hosted PBX has a different meaning than the original centrex implementation. They are also called cloud PBX since all functionality is delivered through the Internet by the service provider to multiple clients. Essentially it becomes a Software As A Service (SaaS) similar to hosted email or productivity software.

Analog Vs IP PBX

The earliest PBX systems were analog machines and had to be operated manually by a person. The boxes were designed to work with the circuit switches that form the backbone of the PSTN. Copper lines connected the PBX with the public network and the connections had to be physically hardwired by technicians from the phone company. Because of this, any moves or additions required a long time to implement and often meant of a time of days.

These systems were simple to implement but lacked flexibility or extensibility. Although modules could be added to provide additional features, it was simply not possible to integrate them with digital communication channels such as instant messaging, screen sharing and other modern technologies. Any changes to the system took a long time to configure and organizations have to maintain in-house experts for the same.

Modern IP PBX boxes are much more flexible and adaptable. Instead of copper lines connecting the PSTN with the PBX, these systems are designed to use SIP trunks for IP calling. Voice calls are directed over the Internet, utilizing the same data network that the organization is already using for other purposes such as document sharing and file uploads. Any modern IP PBX comes with a GUI or online dashboard to configure settings.

Moves, additions and deletions can be done in a few hours without waiting for a technician to come over from the phone company. In the case of hosted or cloud PBX, it may be as simple as requesting additional lines from the provider which may be deployed instantly or in a couple of hours at most. With the proliferation of VoIP calling, the humble PBX has gained many new features and toolsets. Additional capabilities such as visual voicemail, IP faxing, instant messaging, presence etc. have been added that provide better functionality that is suited to modern business processes.