A Complete Guide to PBX System admin May 9, 2022
A Complete Guide to PBX System

A complete guide to PBX System

A complete guide to PBX System


Connectivity, Communication, Collaboration and Cohesion form the underpinnings of successful business operations. Today’s Business Phone Systems, the modern term for what is generally referred to as PBX or Private Branch exchange, facilitate seamless connectivity and communications transcending distances and locations. Know more about PBX, its morphing into currently used VoIP Business Phone Systems, advantages and different types of phone system PBX and VoIP IP PBX on offer from Hodusoft.

What is a PBX?

In the good old era of land-based telephony, a private branch exchange or PBX comprised a network that enabled internal communications through a private network that mimicked the larger exchange. A PBX does more than enabling connectivity between personnel located on the same business premises. The outward-facing side takes care of complex operations such as routing outbound calls and handling inbound calls. The phone system PBX also includes features such as voicemail, auto-attendant, and message recording facility in addition to an internal intercom. 

Traditional phone lines use a Publicly Switched Telephone Network known as PSTN operating over a pair of twisted wires running from an exchange to the end-user where it can terminate into a handset or, as happens in the case of businesses, into an internal business PBX phone system that works like a mini exchange.

In the early days, an operator would be tasked with manually making internal intercom connections as well as routing inbound calls to a particular extension and handling outbound calls. An electronic PBX replaced the operator, letting users make use of dialed codes through key presses to interconnect, receive calls, transfer calls and make outbound calls that would go from the PBX to the local exchange and onwards to other exchanges, finally reaching the dialed number.

The PBX then terminates the connection when a user ends the call. PBX is a great and cost-effective option, especially for businesses that make and receive thousands of calls.

Pros and Cons of PBX System


  • A PBX business phone system reduces the number of phone lines to be run from an exchange to the business.
  • Users within the PBX can dial each other and have conversations without having to leave their table, receive calls at their table, and make outbound calls.
  • PBX offers features such as auto-attendants, call recording, and voicemail.


  • Operations are limited to the PBX. If an employee is out of the building, then he cannot make use of the PBX.
  • Landline based PBX business phone systems are terribly expensive.
  • If an office relocates it leads to major disruption since a PBX has to be set up afresh in the new location.

Different Types of PBXs

As stated in the preceding paragraphs, in the early days the PBX was entirely manual with a dedicated operator taking care of plugging in pairs of wires to connect inbound calls to a particular extension or to connect an extension to an outside line. This gave way to Private Automatic Branch Exchange or PABX that did away with the need for an operator, automating all functions. Both are analog, relying on traditional PSTN lines. 

This gave way to the IP PBX system with the rise of internet and voice over internet technologies and protocols. Even within this ecosystem we had earlier IP PBX phone systems that relied on IP Phones and hardware routers and exchanges. 

Currently, business IP PBX based phone systems make use of IP PBX software and “softphones” that can be used on PCs and mobiles and cloud technologies. Yet another development is the emergence of hosted IP PBX software, bringing in its wake even more advantages such as anytime anywhere use and cost reductions as well as more channels of communications, IVR, audio-video conferencing and more, based on VoIP hosted PBX software.

Analog PBX is on its way out. Hosted IP PBX software-based business phone systems are the de-facto choice of small and large businesses due to their many advantages.

What is an IP PBX Businesses Phone System?

An IP PBX business phone system is a digital system that relies on the internet to transmit voice data signals over IP. The IP telephone makes use of switched packet technology for inbound and outbound calls. A typical IP PBX business telephone system may be hosted on the site with an IP PBX server, VoIP gateway at the core to which you plug in the internet line, traditional PSTN line, and a number of IP Phones. 

The VoIP IP PBX connects to the PSTN using Primary Rate Interface or SIP trunking to establish voice call transfers between IP Phones using the internet (you can read more about SIP here). The same system connects users to other PSTN users as well as other IP phone users.

In the early days of IP PBX and even till today businesses used hardware-based phones as well as softphones. These phones are registered with the SIP server with the IP PBX taking care of establishing the connection through the directory of phones and users coupled with the corresponding SIP address. Internal or external calls can be routed through the VoIP gateway or service provider to the destination.

An IP Phone or softphone serves as the primary interface. Mobile phones running apps may also connect through the IP PBX Businesses Phone system.

The IP PBX connects to the Router for Internet connectivity leading to the VoIP provider, and also to the VoIP gateway to connect to PSTN lines enabling incoming and outgoing calls to PSTN phones. A router/firewall may stand in between the internet and internal IP PBX components. 

There are limitations to hardware-based IP PBX business phone systems. Scalability is one issue. Compatibility with newer protocols and media codecs is another issue. Users are tied to one system with built-in obsolescence and high maintenance costs. Besides, a change in location would necessitate the physical transfer of assets to the new location. Users are also restricted to their location.

The Emergence of IP PBX Software and Cloud Hosted Business Phone Solutions

The limitations of purely hardware-based IP PBX business phones led to the rise of IP PBX Software. The software did away with the requirement for hardware-based IP PBX and it also included softphones as well as a facility to permit the use of mobiles as well as IP phones. Scalability is not an issue and the administrator can add any number of users. 

There are two models based on IP PBX software. Business enterprises usually purchase the software and deploy it on their premises on a specialized server that connects to other computer systems in the building as well as to desk phones and IP phones.

They enjoy full control but must pay for upgrades and maintenance. Users within the system can use desk phones or softphones on the computer, saving desk space and allowing for greater control since the IP PBX software has a lot more features than the hardware-based IP PBX phone system. 

The drawback here is that users are limited to within those premises where the IP PBX software is deployed with limited access from other places and devices. 

With the rise of cloud technologies, one also saw the rise of VoIP service providers and hosted IP PBX software solutions.  On the other side, platforms on which IP PBX business phone systems are based, such as Asterix, also saw vast improvements like the incorporation of the latest VoIP technologies, protocols, and codecs. 

With the PBX VoIP phone system for small businesses, users do not need to purchase IP PBX software when they opt for hosted IP PBX solutions. Instead, it is a subscription model based on a number of phones/users/calls and other parameters. The VoIP service provider of IP PBX software providers offers IP PBX as a service. Users pay to use the software on the “pay as you go” model. The software provider takes care of maintenance and upgrades. 

The core software resides in the cloud. This means users have anytime, anywhere access from a multiplicity of devices like mobile phones, laptops, IP Phones, and softphones on their computers. They just login and connect. It is no surprise that VoIP hosted PBX software is now mainstream.

IP PBX software and hosted cloud-based VoIP IP PBX offers more features and facilities at a lower cost:

  • Compatibility between softphones, mobile phones, PSTN phones, and IP Phones
  • Use from anywhere simply by logging in, using any device
  • Person to person calls, conference calls and audio-video calls, and conferencing
  • Call routing, transfer, recording, intercom facility, direct inward dialing, call hold, and more
  • IVR, WebRTC, and other add-ons, send and receive text messages, chat, and more
  • Log calls, analyze and generate reports

Then there are other features such as integrated audio-video conferencing, audio broadcasts, live chat, auto-attendants, uniformity of call rates across the world or low-cost international calls, contact center functionality, and intelligent call routing.

IP PBX Business Phone System and Hosted Cloud Based IP PBX Software Business Phone Benefits for Businesses

On-premises PBX systems are gradually dying out since newer IP PBX software and hosted IP PBX business phone systems have more benefits.


  • On premises PBX involve high upfront costs by way of hardware and maintenance
  • It is not easy to migrate or scale hardware based PBX systems and one is tied to a particular supplier
  • It is expensive to use and operate
  • It is obsolete given that it connects only to PSTN lines

IP PBX Business Phone Systems

  • IP PBX Business Phone System rely on a mix of IP PBX software and hardware and are usually on-premise solutions. Users have full control and can mix and match various devices like softphones, mobile, desk phones, PSTN, and IP Phones for business communications.
  • There are more features in IP PBX than what you have in older PBX systems. 
  • However, there are limitations also such as high upfront investment in software and then ongoing maintenance. Usage may also be limited since the system may be confined to the premises. 
  • You also need a team to manage the onsite IP PBX setup.
  • If you change location, then you have to physically transport existing servers hosting the software to the new premises or load the software afresh and reconfigure it as well as provide connections to the new PSTN and internet at the new location. 

Hosted IP PBX Business Phone Systems

The Hosted IP PBX or cloud PBX system gives the best features and minimizes the cons. 

  • Hosted PBX or hosted IP PBX software is offered by a software provider and the software resides on servers in the cloud. There is built in redundancy. Services do not come to a halt if a server goes down. 
  • Users subscribe to the service on a Pay as You Go Model. They can scale up or scale down, depending on usage. 
  • Users do not need to pay a high cost up front for the IP PBX software
  • The VoIP hosted PBX software is modular and users can opt for features they need and pay accordingly. 
  • It must be kept in mind that while there are no upfront costs by way of payment of fees for the hosted IP PBX software, running costs may be higher but these are easily paid through earned profits.
  • Users may use the hosted IP PBX in office, from their homes or from any part of the world using computers, softphones in the computer or mobiles. It is always on, available 24×7 from anywhere. This is a great boost for business since business owners and managers are always accessible to their customers and all such call records go into the associated central CRM from which users can also draw data of customers.
  • Users do away with high costs of telephony associated with PSTN lines 
  • If you shift your office your communications are not disrupted since the IP PBX software resides in the cloud-you are up and running in minutes. 
  • You save considerable amount of space that would otherwise have gone towards housing the IPPBX equipments, save on desk space and wiring required for traditional phones and present a neat, clean appearance.

Should you opt for On-Premises IP PBX System or Hosted IP PBX System?

As detailed above, on-premises solutions are expensive and involve considerable upfront investment as well as maintenance. It may suit large enterprise-grade businesses. Small to medium businesses will find that VoIP Hosted PBX Software is the best.

You do not pay anything upfront; you can use a variety of devices and access your IP PBX anytime and from anywhere. The only glitch here is that running costs are slightly higher for the subscription model. But still, these come out of earnings from increased business.

The Multi-Tenant Hosted VoIP IP PBX

Talk about hosted IP PBX software would be incomplete without mentioning multi-tenant hosted VoIP IP PBX. 

When a user subscribes to hosted IP PBX business phone solutions the provider grants him a license to use it based on the number of users and other parameters. The provider bills the client for using the IP PBX software. In effect, it is a single user license. Rates are fixed, the currency is fixed and billing is done by the provider to the user. All users and usage go into a central CRM under one head.

The multi-tenant IP PBX software is just like the hosted IP PBX software. The differences are:

  • The multi-tenant IP PBX software from a provider permits the user to create sub-tenants or sub-users or user groups. 
  • Each sub-user or sub-user group accounts, billings, call records and CRM are distinct and separate in a multi-tenant IP PBX system.
  • The main tenant can bill a sub-tenant with the freedom to fix rates, usage patterns, and other controls like granting permissions to each such sub-user. 
  • Each sub-tenant or sub-user can maintain a distinct directory, user group, and CRM. Sub-tenants can manage and control all users and sub-user groups. They can create sub-tenants on their terms. They can even grant permission to a sub-tenant of theirs to add sub-tenants in a tree-branch fashion with separate rates, accounting, billing, and permissions for each.

This multi-tenant IP PBX hosted business phone system service model has quite a few advantages. For the service provider, it relieves them of the burden of managing hundreds of sub-continents, accounting, and maintaining their call records and databases. They simply bill the main tenant. A tenant enjoys several facilities in that they can create sub-tenant groups and monetize their hosted IP PBX service, creating their own VoIP service in a geographic location or across the world. Their sub-tenant is responsible for managing the downstream sub-tenants in a pyramid structure. 

It is a win-win situation for all, especially for large business organizations with multiple branches in different locations where they wish to keep each branch’s usage separate and yet under the same hosted IP PBX solution. It is also good for “IP PBX as a service” providers since they can get started with very little investment and benefit from roping in hundreds of sub-tenants.

HoduBPS – the one stop source for intelligent, hosted IP PBX Business Phone Systems

HoduBPS offers everything—scalability, integration, advanced AI integrations, modular components, white labeling, customization of language, currency, rates and lots more in its hosted IP PBX solutions. It also offers multi-tenant IP PBX business phone software and solutions tailored and set up to suit each individual user to get the best bang for your buck backed by top of the line services at down to earth prices the big names simply cannot match.

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