What is a PBX System? | Find Best PBX System | How PBX Work

Before to dive into PBX System we first learn some common question about pbx system.

What Does PBX Stand For

A PBX or Private Branch Exchange, is the part of a private telephone system that manages phone calls both internally and externally for an organization.

The PBX was developed to provide large companies a cost reduction in their telecommunications bill by letting them handle their own telephone system routing while still providing a telephone line for calling outside the companies’ network to the Public Switched Telephone Network or PSTN.

pbx system

What is PBX System?

PBX system is also known as PBX Phone System.It is a private telephone network used within a any company or organization. The users of the PBX phone system can communicate internally (within their company) and externally (with the outside world), using different communication channels like Voice over IP, ISDN or analog. A PBX also allows you to have more phones than physical phone lines (PTSN) and allows free calls between users. Additionally, it provides features like transfer calls, voicemail, call recording, interactive voice menus (IVRs) and call queues.

How does a PBX phone system work?

Users of the PBX phone system share a number of outside lines for making external phone calls. A PBX connects the internal telephones within a business and also connects them to the public switched telephone network (PSTN), VoIP Providers and SIP Trunks.

To understand how Private Branch Exchange systems work, one must comprehend the functioning of the traditional switchboard. For a regular telephone system, telephone lines are linked via trunk lines to the physical location of the service provider’s LCO (Local Central Office). A human operator stationed here then routs all incoming and outgoing calls.

Additionally, service providers would provide caller ID capabilities, voice mail recording and call forwarding facilities. A monthly fee is then levied on you for these services. For a company requiring several phone numbers/lines, the telephone bills can become prohibitive.

This is why the acquisition of a Private Branch Exchange system is preferred for any business be it small, medium or large.

With the modern IP Private Branch Exchange systems, the LCO is replaced. A switchboard of sorts is then hosted in the system.

This is through either a cloud or physical hardware in a server room. Upon completion of installation, various employees and their workstations are connected through their extension codes. This connection allows the system to handle any internal and external calls.

A VoIP Private Branch Exchange system offers a significant competitive advantage to any business. The cost savings on purchase, installation and maintenance are significant enough to influence the profitability of an organization.

Additionally, the customization options help give a personal touch to organizational communications with clients, stakeholders and suppliers. The inherent flexibility and adaptability of this technology should offer options suitable to the unique communication needs of any organizations.

How much is a PBX phone system?

PBX Phone System Prices. The average cost for a PBX system is approximately $1,000 per user (employee).

What is the primary function of a private branch exchange PBX )?

A PBX (Private Branch Exchange) is a switch station for telephone systems. It consists mainly of several branches of telephone systems and it switches connections to and from them, thereby linking phone lines. Companies use a PBX for connecting all their internal phones to an external line.

Which PBX is the best?


Asterisk is essentially the grand-daddy of all open source VoIP and PBX solutions, and continues to operate as the gold standard

SIP Foundry:

SIPfoundry is a not for profit open source community. It is to promote and advance SIP-related Open Source projects. Through SIPfoundry the users, developers, and distributors of SIP based products can collectively support each other and accelerate the growth and adoption of SIP.


Through Elastix you can build the ideal PBX for your business whatever its size or requirements. It allow you to choose how to deploy depending on what you and your business needs from its communications platform. If you want an on-premise Linux PBX, to install on Windows, or you prefer to self host your phone system in YOUR cloud with your own cloud account, the choice is yours.


FreeSWITCH is an open source communications platform. It is a library which ships with a small executable that loads the library, launches the core, and performs the various tasks that are defined by the modules. In its base form FreeSWITCH is a soft-switch or PBX telephony application, not completely unlike Asterisk but capable of handling thousands of simultaneous calls.

OpenPBX by Voicetronix:

It is an easy to install and configure PBX software platform that is fully supported by our telephony hardware. It is suitable for small to medium businesses (SMB) that require a sophisticated phone system usually found in larger enterprises but without the price tag!

OpenPBX harnesses the ease of use and efficiency of the desktop PC and combines it with the plain old telephone handset to give you advanced features and the ultimate control and use of your communication system.


PBX in a Flash and Incredible PBX 13-13 are the latest Lean, Mean Asterisk Machines, high-performance, turnkey Asterisk PBXs that are easy to upgrade.

Features include CentOS/SL 6.9 support and Asterisk 13 with FreePBX 13 GPL modules. All versions support Google Voice for free calling throughout the U.S. and Canada if available from Google. 32-bit and 64-bit OS supported as well as a number of virtual machines including VirtualBox and VMware appliances.

Add-ons include one-click installs of Incredible Fax and many other Asterisk utilities. Visit Nerd Vittles for the latest tutorials.


FreePBX is a web-based open-source graphical user interface (GUI) that manages Asterisk, a voice over IP and telephony server. It is a component of the FreePBX Distro, which is an independently maintained Linux system derived from the source code of the CentOS distribution, having Asterisk pre-installed. It is also included in various third-party distributions such as The FreePBX Distro and AsteriskNow.


OpenSIPS is a mature Open Source implementation of a SIP server. OpenSIPS is more than a SIP proxy/router as it includes application-level functionalities.OpenSIPS is a multi-functional, multi-purpose signaling SIP server – it can act as SIP Router/Switch, SIP Registrar, Application Server, Redirect Server, Load Balancer / Dispatcher, Back-to-Back User Agent, Presence Server, IM Server, Session Border Controller, SIP Front-End, NAT traversal Server, IP Gateway (SMS, XMPP) and others

You may also see: Asterisk vs FreeSwitch

What is the difference between PBX and PABX?

In a nutshell, PBX stands for Private Branch Exchange, and PABX stands for Private Automatic Branch Exchange. The word ‘Automatic’ gives a hint as to how the two differ from each other. Because of this, the terms PABX and PBX are used interchangeably as they basically point to the same system.

How does a PABX work?

How Does a Pabx Work? PABX, also known as PBX, is short for Private Automatic Branch Exchange. Essentially, a PBX is a telephone switch used by organizations and businesses. This device functions in the same manor as a traditional telephone switchboard but is scaled down to accommodate business settings.

What does SIP trunking mean?

The definition of SIP trunking is a Voice over Internet Protocol (VoIP) based on session initiated protocol (SIP), which enables internet-based telephony vendors to provide telephone services and unified communications to customers with SIP-based private branch exchange (IP-PBX).

How do phone systems work?

A central phone system links to up to ten other individual phone lines throughout an office and separates them by extensions like “Line 3” or “Line 4.” Phone branch exchange (PBX) systems work by automating the process of forwarding calls with a prerecorded message or ability to dial an extension during menu options.

What are SIP Phones?

SIP phones, also known as VoIP (Voice over Internet Protocol) phones, are IP (Internet Protocol) telephones that enable your internet service provider to integrate basic phone capabilities with web, email, online chat and more through IP network

The Best PBX System for Small Business

Following are the different types of PBX System for SMBs.

Traditional PBX

We know traditional PBX system gains its name from its use of “traditional” landlines. Hence the PBX system is actually hard-wired to analog or PRI copper circuits. Popular vendors for traditional PBXs are Nortel, Panasonic and Vodavi.

Out of all the options available for PBX systems, a traditional PBX can be the most reliable. These traditional PBX systems allow communication to take place on dedicated lines that also provide excellent voice quality.

Hosted PBX

An hosted PBX is also known as IP PBX that is provided by an off-site VoIP company. Since the company is hosting your PBX system, monthly fees are required. In two ways these monthly fees are usually reasonable for small businesses.

In the first place, a hosted PBX often comes with features that allow unlimited free calls to be placed to certain locations around the globe. Also, unlike an on-site IP PBX, there are no initial investment costs for equipment and software installation, though you may need to purchase your handsets. Polycom is the leader for handsets that are used in Hosted PBX deployments.

It is also important to consider the number of lines you wish to access from the hosted PBX. Over time, the cost per line may actually be higher than if you would have simply used an on-site IP PBX for that same time period.

IP (Internet Protocol) PBX

An Internet Protocol PBX  or IP PBX system allows calls to function using VoIP. This means that all of the information that is passed through phone communication is converged with your data communications and relayed using Internet Protocol (IP).Main leader of IP PBX systems are Avaya, Cisco, Mitel and Shoretel.

The convergence of data over the communication network means each call is less expensive than it would have been if it had been routed through a traditional PBX. If many calls are placed, especially if they each have a long duration, then an IP PBX is more cost effective per call.

Since this is an on-site PBX, all hardware and software that is required for the IP PBX must be purchased and installed at the expense of your business. This results in an up-front cost though leasing arrangements can be negotiated, as well.

Mobile PBX Solution: How Does It Work?

mobile pbx system

Traditionally, a business telephone system that can offer features including Direct Inward Dialing (DID), Auto-Attendant and Call Transfer would require a significant investment. Add to that the need for ongoing maintenance and additional contract work to scale up and its expense is ongoing.

Yet in today’s mobile world, many employees bypass the company telephone system and conduct business on a privately owned or company provided cell phone. Is the duplication of hardware justified?

The Mobile Office Phone System is a solution that offers an alternative to traditional and Voice over IP (VoIP) products. The Mobile Office Phone System works entirely over existing cellular networks such as Verizon, AT&T, Sprint and T-Mobile while utilizing a cloud based or Hosted PBX.

This solution enables business owners to benefit from a fully featured business telephone system without the expenses associated with it, such as hardware, cabling, installation, software and maintenance contracts!

The Office Phone System from On Relay promotes agility and flexibility by allowing staff to use the office telephone system on their smartphones. A Mainline office number serviced by an Auto Attendant 24/7/365, can be configured with each member of staff getting their own work number.

Members of staff can send and receive calls on their DID from their Smartphones, keeping their personal number private.

This means that even if your staff are spread out around the country, they can still benefit from all the features of an office phone system as if they were all sitting centrally in the main office. The Office Phone System also works with Soft and standard SIP phones such as those from X-Lite and Polycom respectively.

There are no contracts required and we can transfer existing numbers without charge to the service. Once the system is configured, adding or removing a new staff member is as easy as downloading or removing a Smartphone App.

This unique solution provides considerable improvements in efficiency for those companies whose staff spend time away from a desk or out of the office completely.

Significant savings in Capital Expenditure (CAPEX) can be made as members of staff no longer require a dedicated desk or desk phone and the company does not need to invest in expensive telephone hardware, installation and support.


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