IP PBX & Hosted PBX (Private Branch Exchange)

November 15, 2021by Russell0

While people tend to start wholesale VoIP businesses, they have less idea about Private Branch Exchange or PBX, what PBX does, and its types. This is a very important part as this is needed to handle incoming and outgoing calls of an organization along with communicating outside the company through external calls. 

PBX is a core division of the whole VoIP calling system. It is very important to know about PBX and its functionalities. In this article, we are going to discuss everything you need to know about PBX. So, don’t go anywhere.

PBX, IP PBX & Hosted PBX: Everything You Ever Need to Know

We will break down what is PBX, IP PBX, AND Hosted PBX. We will discuss what they are, their functionalities, benefits, and drawbacks (if there are any). PBX, IP PBX, and Hosted PBX are required to manage complete VoIP networking and to execute calls properly. 

So, let’s start with PBX first – 

What is a Private Branch Exchange or PBX


Image Source: voiphow

Taking about PBX or Private Branch Exchange definition, it refers to an analog telephone system used to switch calls between users and local lines in an enterprise over a local line. In order to facilitate internal communication inside an organization, the PBX system is a must.

— Generally, a PBX is a piece of hardware used to switch and route calls. It helps to manage the incoming and outgoing calls of an organization. Also, users can communicate externally apart from inside communication. 

And that’s not all, a PBX can help an organization to avoid additional costs of separate phone lines. How? Because a PBX allows the users to share multiple phone lines. 

The endpoints of a Private Branch Exchange are connected to a switch. The endpoints of the switch are connected to a router while the other ports are connected to the endpoints of IP phones. 

Although the switching system handles a small amount of traffic, a large number of calls are exchanged through it. Among many features, here are some mentionable features of PBX –

  • Enable auto-attendants when someone is waiting for a call.
  • Enable Unified Communications or UC router – both wireless and wired.
  • Terminates telephone trunk lines.
  • Handles inbound and outbound calls.
  • Automatically handles inbound calls.
  • Ingrates with Customer Relationship Management (CRM) systems.
  • It features Interactive Voice Response (IVR) for call monitoring.

Components of Private Branch Exchange

Usually, the followings are components of the traditional Private Branch Exchange – 

  • Multiple telephone trunk lines.
  • Multiple lines within the network.
  • A computer to manage call switching.
  • An optional switchboard to operate manually.

Types of Private Branch Exchange

In general, there are 2 types of Private Branch Exchange – Traditional PBX and IP-based PBX. These 2 general types of PBX are further categorized into 2 types. 

Traditional PBX

  • On-Premise PBX
  • Hosted traditional PBX
IP Based PBX

  • On-Premise
  • Hosted IP PBX

What is IP PBX

The traditional PBX has limitations to connecting with a certain number of trunk lines and internal device extensions. Keeping that in mind, the IP PBX was introduced to keep up with the technological demands.

— Nowadays, IP PBX includes both hardware and software. And that’s not all, it connects with various communication devices like hubs, switches, routers, telephone adapters, telephone sets, and more.

IP PBX usually works in VoIP telephony systems. It switches calls between VoIP users. Unlike the traditional PBX, it not only works with telephone lines and switches but also with an internet connection to channel calls. As a result, it ensures secure internal communication for any business by connecting extensions to the Public Switched Telephone Network or PSTN.

The benefits of IP Private Branch Exchange

  • The first and foremost benefit of the IP PBX is cost-efficiency. It is a better cost-effective solution than the traditional PBX. 
  • It is very easy to install and configure IP PBX in comparison with the proprietary phone system. 
  • It offers better scalability, better management, and enhanced features.
  • Most IP PBX is software, which makes them easier to maintain and upgrade than the previous hardware-based PBX.
  • An interactive web/GUI offers a user-friendly interface.
  • Eliminate vendor lock-in.
  • Eliminate phone wiring.

Drawbacks of IP PBX

  • IP PBX may offer an API to integrate with CRM softwares. However, the cost is sky-high, especially when the CRM vendor doesn’t use your particular PBX.
  • If you are running a premise-based IP PBX business, make sure you have a team of skilled customer service representatives. As the industry experts say – 

“88% of consumers prefer dealing with a company with strong customer service rather than one with the hottest, most innovative product offerings.” 

What is Hosted PBX

Hosted PBX

Image Source: Gradwell

A hosted PBX is a cloud-based, virtual PBX phone system that provides secure and reliable phone service for a particularly owned and operated business or organization over an internet connection, where there’s no need to operate a personal call controller or server.

— Similar to IB PBX, the hosted PBX can be fully regulated and accessed via the internet. However, a third-party service provider is responsible for building, delivering, and managing the PBX system. Hosted PBX is also known as Hosted VoIP or Cloud PBX.

Third-party service providers will take care of building and hosting the PBX system on their premises. As a customer, you can stay out of the hassle for further maintenance. One can connect hosted PBX to a client’s telephone system through the internet. 

The benefits of Hosted Private Branch Exchange 

  • One of the major benefits of hosted PBX is it is hosted and maintained by the service provider on its premise. So, it saves both time and money. 
  • To set up hosted PBX, you don’t need any heavy infrastructure or equipment. Only a reliable internet connection is enough. 
  • The service of a hosted PBX is scalable. One can connect as many phones and mobiles as possible with a hosted PBX.
  • The hosted VoIP or hosted PBX is reliable. There is no lag, delay, or drop in VoIP calls in terms of service quality. It is as good as the traditional hardware form.
  • Talking about features, the hosted PBX or hosted VoIP comes with some latest features like auto-attendant, voice/fax to email, queue management with override, conference calling, web conferencing, integrated audio, call recording, and etc. More importantly, the hosted PBX features the Find Me/Follow Me feature.
  • It increases the security of the VoIP system. Find out more about the security measurements for VoIP business

Benefits of hosted PBX from Business Prospects

The hosted PBX is referred to as Cloud PBX. Because the hardware and PBX don’t remain in the same location where the VoIP service is used. Instead, everything is handled at an off-site location that is pretty far.  

And hosted PBX is cost-effective. It doesn’t require installing additional hardware or heavy equipment. As a result, it is very suitable for small or medium-sized businesses. All it requires is to purchase IP phones. There are combo packages offered by the hosted VoIP service providers that include server, dialer, and Softswitch altogether. 

Drawbacks of Hosted PBX

  • Hosted PBX might require a quality broadband connection.
  • There are network limitations sometimes.
  • There are high chances that the monthly charge will include tipping points.


This brings us to the end of our conversation. We hope you have learned enough about Private Branch Exchange (PBX), IP PBX & Hosted PBX. Reading this article should help you a lot when you are hesitating to choose a suitable PBX for your organization.

— All types of PBX work pretty much the same way, having their specific features, benefits, and drawbacks. Thanks for being with us, we will soon come up with an insightful blog like this one.


I'm Russell, our go-to expert for VOIP softswitch server installation. With hands-on experience in deploying Sippy Softswitch, MVTS Pro, iTel Switch, and MediaCore Softswitch, he's the guru you can rely on. As a key contributor to vpsvos.com, Russell simplifies the complexities of server setup, configuration, and troubleshooting, making the world of Voice over IP accessible to all.

Leave a Reply

Your email address will not be published. Required fields are marked *

VPSVOS Communications is a registered company in the United States of America. Registered Office: 19854 Michigan Avenue Brekford, CA 599780 USA.
OUR LOCATIONSWhere to find us?
Stay up to date with the latest news about VPSVOS Communication, events, special offers and more by connecting with our social media.
VPSVOS Communications is a registered company in the United States of America. Registered Office: 19854 Michigan Avenue Brekford, CA 599780 USA.
OUR LOCATIONSWhere to find us?
Stay up to date with the latest news about VPSVOS Communication, events, special offers and more by connecting with our social media.

Copyright © 2005 – 2023 VPSVOS All Rights Reserved.

Copyright © 2011 – 2023 VPSVOS All Rights Reserved.