PBX stands for private branch exchange. It is the phone system inside a business that connects internal extensions to each other and to the outside phone network. It lets a company share a small number of outside lines among many users and offers features such as extensions, voicemail and call transfer.
What does a PBX do?
- Routes incoming calls to the right extension or group
- Lets employees call each other by extension for free
- Shares outside lines or trunks among many users
- Provides voicemail, call forwarding, hold and conferencing
- Offers an auto-attendant ("press 1 for sales")
Types of PBX systems
| Type | How it works | Best for |
|---|---|---|
| Traditional (analog or digital) PBX | On-site hardware connected to phone lines | Legacy setups |
| IP-PBX | On-site server using VoIP and SIP | Companies wanting control and local hosting |
| Hosted PBX / cloud PBX | Provider hosts the PBX | Teams wanting low maintenance and remote work |
Hosted PBX in plain terms
A hosted PBX moves the system to the provider's servers. You keep your phones and extensions, but you do not maintain the PBX hardware. This is the model most people mean by a cloud phone system.
PBX and SIP trunks
An on-premise PBX needs outside lines. Today those are often SIP trunks delivered over the internet. Read our guide to SIP trunking and size your lines with the Erlang calculator.
Is a PBX still worth it?
For many small businesses a hosted PBX is simpler and cheaper to run. Larger sites with strict control, local compliance needs or heavy internal traffic sometimes prefer an IP-PBX. Evaluate maintenance cost, staff skills and how critical calls are to your operations.
Frequently asked questions
What is the difference between PBX and VoIP?
PBX is the phone system. VoIP is the technology for carrying voice over IP networks. Modern PBX systems commonly use VoIP.
What is a hosted PBX?
A PBX run by a service provider and delivered over the internet instead of installed in your office.
Can I add remote workers to a PBX?
Yes, especially with IP-PBX and hosted PBX, using softphone apps or IP phones over the internet.
