Private Branch Exchange (PBX)

Author: Anagha Ravi

What is a Private Branch Exchange (PBX)?

A Private Branch Exchange (PBX) is a system that performs a similar function for a single private location, managing incoming and outgoing telephone traffic to and from incoming trunk lines and individual telephone extensions.  It replaces the live switchboard operator.

PBXs usually take the form of an on-premise appliance. With the emergence of VoIP, a PBX can be installed remotely, to manage multiple sites, or it can be cloud-based, managing multiple or single locations.

A telephone exchange, historically, has been a central office location that serves a region, or “exchange.” This is where all the physical phone lines for the region terminate, and where connections between numbers from within and outside the local exchange are managed. Originally, this took the form of a switchboard, where these connections were performed manually, but, of course, nowadays, these connections are performed by automated switching equipment.   

A brief history of the PBX

In the very early days of telephone communication, before there was a national network, the completion of calls was performed by human operators.  Large exchanges were established to serve more heavily populated areas, while some small rural exchanges were managed by a single operator.  The exchange equipment and phone lines were often installed in the operator’s home to provide 24/7 service.  

In the case of larger exchanges, serving thousands of numbers, the job of physically completing the terminations by plugging and unplugging the wires was demanding work, and the original operators were young boys, thought to have the stamina to complete hundreds of connections per day.  Unfortunately, many were lacking in customer service skills, and after complaints about the rudeness of the operators, they were replaced by young women, better able to interact with callers in a more civil manner.

For many years thereafter, despite technological and infrastructure advances, all public or private calls were routed through the Public Switched Telephone Network, or PSTN.  For example, a call to a co-worker in the next office had to be manually answered and completed by a human operator at the Central Office, or CO of the carrier.  Not only that, but each line required a dedicated public Direct Inward Dial number, or DID.  To make matters worse, each call was billed at the prevailing local rate.

Eventually, the carriers automated the process of completing calls at the CO level, while long-distance calls still required human intervention.  As Infrastructure improved, the termination of long-distance calls was automated, but it should be noted that well into the ’60s, there were still COs in sparsely populated rural areas operated by human operators, and virtually all business systems with multiple local extensions, known as a Private Branch, required an on-premise human switchboard operator to route incoming and outgoing connections.

It wasn’t until the early ’70s that systems began to be developed to automate the routing and completion of calls on a Private Branch Exchange, a device dedicated to the routing of incoming and outgoing calls to and from trunk lines and individual extensions.  At this time, of course, because phone lines could only carry a single concurrent call,  each endpoint required a dedicated outside line, with a DID associated with it.  Also, in these early times in development, most Private Branch Exchanges still required the intervention of a human operator for some features.  The automated PBX also reduced cost by facilitating interoffice calling without having to route to an outside line, thus eliminating the cost previously associated with these interoffice calls.

Initially, these systems were costly, and generally found at the enterprise level.  Over the years, smaller SMB versions were developed, and with tone (DTMF) dialing becoming the industry standard, rapid advancements were made in the development of automated features.  On-premise use of PBX systems became more common in the SMB area, but there was still the constraint of analog trunk lines, which were only able to carry a single concurrent connection, requiring a dedicated DID per extension.  So, on-premise PBX systems still were not commonplace, as they were expensive to install, and as each extension required its own DID, the common choice among SMBs was to just use DIDs for individual endpoints. Other means for interoffice communications, such as intercom and paging systems were less expensive to install.

Jump forward to the advent of VOIP.  The first PBX systems that could be considered VOIP were developed to take multiple analog or PRI phone lines from the outside, convert them, and route them to and from IP-based endpoints on the local area network.  These VOIP gateway systems were popular with the major phone carriers because they were able to offer their customers all the features of an IP-based PBX while preserving their per DID pricing model.

At the same time, two important developments emerged.  Digital SIP Trunking and the open-source Asterisk platform.  With digital SIP trunking, a single trunk with a single DID was able to support an unlimited number of concurrent calls. 

The need to terminate individual endpoints to a dedicated DID became obsolete.  The Asterisk platform is an open-source software project that forms the basis for virtually every known VOIP device and system.  Asterisk is an open-source Linux-based platform that has been around since the late 90’s.  Over the years, many contributors have developed modules that facilitate every conceivable feature a user could need from a PBX system.  Numerous graphic user interfaces have been developed over the years, the most popular of which is FreePBX. 

The IP PBX manages incoming and outgoing calls, just like its predecessor, but it does so much more.  An IP PBX has the ability to automate all of the common call routing you would expect, but also is able to automate billing and collection, customer service management, automated outbound dialing, voicemail…the list goes on and on. 

Three types of PBX

Hosted PBX

A hosted PBX is an off-premise, or “cloud” PBX, usually shared by numerous different configured accounts, or tenants.  Most of the features of an on-premise PBX are available, depending on the host provider or hosting plan.

Virtual PBX

A virtual PBX is generally installed to a VM, or Virtual machine, using VMWare, or another virtual platform, and is used primarily for cloud deployments and hosted PBX.  Whether deployed on-premise or in the “cloud,” creating a virtual machine eliminates the need for a dedicated hardware device.

Legacy on-premise PBX

As users upgrade to newer SIP-based technologies, there are fewer analog and hybrid PBX systems in active production.  The legacy systems take analog trunk lines and route them accordingly.  In the hybrid model, incoming analog lines are routed to IP-based endpoints. 

Benefits of an IP PBX

  1. Call automation.  The need for a human receptionist is eliminated entirely, but that’s not all.  So many other routine tasks like account management, billing and collections, customer support, can be automated, as well, thus greatly enhancing efficiency.
  2. Versatility. Calls can be routed to individuals, groups, or call queues.  IP PBX systems can be linked to customer databases and CRM systems.  Using an API, or Application Programming Interface, virtually anything you can imagine is possible.  
  3. Reduction in monthly costs. Additionally, the wide range of additional automation features add to the value of an on-premise IP PBX in the form of reduced staffing needs, and enhanced efficiency.  An IP PBX is one expenditure that guarantees ROI in a very short time.  

PBX use cases

While the legacy PBX is on its way out, it is important to recognize the constraint of the analog model. 

Because analog phone lines can only support a single concurrent connection, a dedicated DID, or direct inward dial number on a dedicated incoming trunk.  It should however be noted that digital trunks can handle up to 23 concurrent calls with an unlimited number of DIDs.  This is where the original “per seat,” or per user pricing model for voice service was established.  With the advent of VOIP, some of the major carriers introduced hybrid PBX systems, giving the users the impression that they were using VOIP, while preserving the per seat pricing model.

Many hosted IP PBX solutions are available, and ease of deployment is the major advantage to these systems.  The user is provided preconfigured endpoints that register to a cloud based multitenant PBX.  This solution is good for small temporary deployments, or small and home office environments.  It should be noted, though, that most hosted PBX providers still bill on the per seat model, and many even assign dedicated DIDs to individual extensions, so in this respect, it is similar to the legacy PBX.  Users do not get the full range of available features, and some common features are billed at a premium rate.  Hosted PBX is not practical for larger deployments, where the goal is cost reduction.  When shopping for a hosted PBX provider, it is important to determine whether they are using this per seat model.  

In environments where rack space or network reliability is an issue or where a PBX is serving multiple locations, a virtual PBX is often a good solution.  Most virtual PBX systems are deployed with the cloud model, though they can often be locally installed, sharing a hardware platform with other virtual machines serving other applications.  Virtual hosting platforms like AWS make it easy to create a virtual machine in the cloud.  Whether deploying on AWS or similar, or locally installed, it is important to consider the additional cost of deploying to a cloud, or the licensing cost for a local deployment.

How is Bandwidth involved with PBX?

Bandwidth does not typically interact directly with PBXs. A customer often has a Session Border Controller (SBC) between their PBX and Bandwidth.