There are lots of different phone systems available to small businesses. And you may be still undecided on what is the best option for your team and how switching to a specific system might impact your team.
Today, we’re diving into one of the oldest phone solutions still in use — PBX phone systems. We’ll tell you everything you need to know about these legacy phone systems, including:
- The different types of PBX systems
- Their features and limitations
- How they compare to phone systems like VoIP
If you decide you’re not happy with what PBX has to offer, we’ll present a scalable VoIP alternative with a seven-day free trial.
What is a PBX phone system?
A private branch exchange (PBX) system, sometimes called a PABX, is a business phone solution that connects all the desk phones in a company’s network. This creates a private telephone network that helps employees answer calls together and communicate internally through extensions (like pressing ‘734’ to reach Sam in Accounting).
You can use a PBX to:
- Manage calls concurrently: PBX systems can split your business phone number into private phone lines, which means multiple members of your team can make or take phone calls at the same time.
- Create line extensions: You can use auto-attendants to direct callers to the right team member or department. Plus, you can dial an extension to reach internal co-workers if you’re not in the same department or workspace.
- Transfer calls: If you receive a call that needs to move to a different department (like from your call center to sales), you can transfer the call to another desk phone on the same private telephone network.
The building blocks of PBX have been around since the 1870s. In the 20th century, live switchboard operators would plug phone lines into different ports to send callers to the right destination.
The switchboard system was eventually upgraded to Public Switched Telephone Networks (PSTN). PSTN is the system behind landline phones and led the way to analog PBX.
Today, PBX systems have evolved to work without live human operators. However, the services they provide to businesses leave a lot to be desired.
Types of PBX phone systems
There are three kinds of PBX systems available today:
1. Analog PBX phone systems
Analog PBX was invented in the 1960s. These phone systems connect your desk phones using physical telephone lines made from copper wires.
Because of their age and dated technology, traditional PBX systems can’t access many features beyond what a traditional landline provides. You won’t have access to advanced features like ring groups or voicemail to email, and you can’t integrate with third-party tools like Slack, Salesforce, or Zapier.
Plus, analog phone systems cost thousands of dollars to set up. Between the need for physical equipment and a multi-week installation time, analog PBX is one of the most expensive phone systems still in use.
2. On-premises PBX phone systems
An on-premises PBX system creates a private network of desk phones without relying on public telephone wires. All phone calls are made through an internet connection, which boosts your call quality and provides higher uptime than a traditional analog system.
As you research on-premises systems, you may also come across the acronym, IP PBX. Many on-premises phone systems are based on IP PBX, which stands for internet protocol private branch exchange. An IP PBX system connects to the internet through Ethernet cables, so you won’t need copper wires to manage incoming or outgoing calls. However, this still isn’t a perfect solution — like the analog PBX, you’ll need to use physical desk phones.
You can use an on-premises PBX phone system to:
- Manage call routing to other phone numbers
- Set up auto-attendants for customers
- Make calls phone calls with VoIP technology (more on this later)
Keep in mind also on-premises PBX systems require hardware to be stored on-site. You’ll need a dedicated closet to score all your tech, as well as physical desk phones to plug into available jacks. If you don’t have a physical business or the extra space for a tech closet, this may be an immediate deal-breaker.
You’ll also need to partner with an IT provider to service all your physical equipment. These experts may need to install updated hardware or troubleshoot your tech as time goes on — and most updates won’t be free.
You’ll also need professional help to expand your phone network and add new users. First, you’ll have to buy brand-new hardware (including desk phones and handsets). Then, you must pay a provider to install everything correctly. This means that on-premises PBX may lack the scalability you need to grow, especially if you don’t want to spend thousands of dollars to expand your phone network.
3. Cloud PBX phone systems
Cloud-based PBX systems let you create an internet-based phone network through a third-party provider. Sometimes called hosted PBX or virtual PBX, these networks are managed by off-site providers, which means you won’t have to store wires or other equipment at your business.
You can use cloud-based PBX systems to access more modern functionality, including:
- The ability to work on-site or remotely
- The opportunity to use cell phones, laptops, and desktops rather than landlines for calling
- Customized call queues and call recording (depending on the provider)
Cloud PBX systems are easier to get up and running than analog or on-site options. You won’t need to purchase as much heavy equipment, and you’re not the sole party responsible for its maintenance. Your hosted provider is tasked with managing your servers and can usually provide some limited customer service.
However, there are several limitations to cloud-based PBX services:
- You may still need to use desk phones depending on the provider you choose, which will keep you chained down to your desk and spending a lot upfront. Not all cloud PBX providers have an app you can use on your computer or mobile device.
- You’ll be at the mercy of your third party’s IT provider every time you want to scale up your network. Their monthly maintenance costs on a PBX system for small business will certainly not be cheap, and it might tack extra expenses onto your budget.
- You won’t have access to any collaborative tools, stopping you from serving customers more effectively.
Cloud PBX systems still fall short of what modern businesses need. If you want all the perks of a cloud phone system without the limiting drawbacks of PBX, you’ll want to consider a modern alternative: VoIP.
From PBX to VoIP: The new era of business phone systems
PBX systems have been around for decades, but their restrictions and limitations are still a sore spot for most businesses. For example, it’s hard to leave the office and take your phone calls with you unless you’re working with a cloud provider. Plus, as mentioned earlier, adding new desk phones is almost impossible without dropping thousands of dollars on new equipment.
Business owners got tired of managing legacy software and wanted a new solution to manage their calls — which is why thousands of companies all over the world transitioned to VoIP.
VoIP (also commonly referred to as a virtual phone system) stands for ‘voice over internet protocol,’ which lets you make or take phone calls through nothing but an internet connection. Unlike analog PBX, you don’t have to hire an expert to connect copper wires to individual desk phones. And unlike on-prem PBX, you don’t need a dedicated server room for equipment — because there’s no equipment required. As long as your cell phone, laptop, or desktop computer has a suitable WiFi connection, you can make or take calls from home, the office, or even on the go.
Curious to learn more? When it comes to all the benefits of VoIP, this is just the tip of the iceberg.
5 powerful benefits of a virtual phone system compared to PBX
The cream rises to the top. And that’s no different with virtual phone systems.
There are five benefits to using VoIP instead of PBX:
1. Virtual phone systems are most cost-effective
With virtual phone systems, you don’t have to put down thousands of dollars just to get up and running. Platforms like OpenPhone work on smartphones and computers so you can make phone calls and text from anywhere.
You only pay to access the platform and its features, starting at $15 per user per month with OpenPhone.
2. Communicate how many people prefer: through texting
Most PBX systems don’t support texting. With a virtual phone system, you can call and text from the same phone number so your customers can easily respond back to you. With OpenPhone, you can even automate specific touchpoints including auto-replies, scheduled texts, or setting up appointment confirmation texts.
3. Easier to launch and scale as your team grows
On a VoIP system like OpenPhone, you’ll never have to buy extra hardware to start or grow your team. Just invite new team members to your OpenPhone plan and have them download the app on their computer, tablet, or smartphone. Any new member can start making and taking calls on the same day — even within minutes of accepting their invite.
Want to add new business numbers to your network? OpenPhone doesn’t force you to buy new numbers every time you scale your team. Each user on your OpenPhone plan comes with a free phone number in the US or Canada (including toll-free numbers).
You can turn any number into a shared number so that everyone can share responsibility for calls or leave them as individual lines so people can send texts, take phone calls, and listen to voicemail recordings on a completely separate business number.
In a nutshell: your team can grow at its own pace. Your phone network can be as big (or small) as you need it to be at any time.
4. Less dependent on IT support
PBX phone systems require dedicated IT teams to perform updates, add lines, and maintain your system. If anything goes wrong, you’ll have to wait on support to fix things — which could take hours or even days depending on the problem. Plus, ongoing PBX maintenance isn’t cheap. You might have to pay a retainer cost even if you don’t use IT services often, which could bloat your budget and cause more frustration down the line.
None of this is a problem with a virtual phone system. You won’t have to worry about reaching out to IT when your clunky desk phone stops working correctly. With OpenPhone, you can use our library of support docs to see if your problem can be resolved in a couple of taps. If you need more support, you can contact us directly to chat about what’s going wrong.
And unlike most PBX phone systems, support from OpenPhone is 100% free.
5. More options to work together
Your team needs to collaborate to build better relationships with your end customers — but PBX systems don’t make that easy.
Virtual phone systems like OpenPhone let you access a far more robust set of collaboration features.
- You can create shared numbers for your business by inviting team members to the same phone number. Everyone on the number can access the same contact inbox and make or take calls using the same phone number. You can also be on separate calls at the same time.
- You can share the responsibility for incoming calls by forwarding calls to multiple devices — AKA, simultaneous ring. All devices in the ring group will keep ringing until the call gets picked up. This means your customers will always have someone at the end of the line.
- Need to delegate an upcoming task? Or confirm some details with your teammates? OpenPhone’s internal threads and mentions let you comment or tag team members under any call, text, or voicemail — these comments are only visible to teammates in your OpenPhone workspace. You can tag someone in a comment to follow up or double-check your work, then move on to other tasks that require your attention.
Plus, VoIPs don’t need to be housed on-premise like a traditional PBX. These are virtual phone systems that can be accessed from desktop, browser, or mobile apps. This means you can access features that traditional PBXs just can’t provide, including instant messaging, CRM integrations, and automations like auto-replies.
How to choose the best phone solution for your team
Not sure if PBX or virtual phone systems are the right choice for your business? You can narrow down your options by running through this four-step process:
- First, identify your must-have phone features and create a short list of providers. Consider whether a specific provider offers the features you need right now. Also, can it scale up as your company grows or work alongside tools you’re already using?
- Next, review your selected providers’ websites to verify contract lengths, uptime history, and potential fees. If you’re unsure where to begin or want more guidance, check out our guide to the best virtual phone services to see how some of the most popular phone systems compare side by side.
- Reach out to the providers still in the running to answer any questions or concerns you have. Remember to ask clarifying questions about the taxes and fees involved, as well as what you can expect both before and after launch day. How soon can you expect support, and through what channels can you get in touch?
- Finally, it’s time to sign up for a trial so you can try before you buy. If the service in question doesn’t offer a hands-on presentation (or at least a virtual demo), you may want to look for a provider that does. OpenPhone offers a seven-day free trial so you can test out our platform for yourself or with a few teammates.
OpenPhone: The best alternative to a PBX phone system
PBX phone systems may still be around. However, their many limitations and expensive startup costs are pushing most businesses to phase them out. Not only do they make it hard to add team members as you grow, but their costly equipment and maintenance fees are higher than any other system on the market.
VoIP phone providers like OpenPhone are the perfect foil to this. We offer all the scalability, usability, and functionality you need to get your team up and running the same day — and all for just $15 per user per month. You’ll never need to purchase any special equipment, and you don’t need an IT expert to get extra phone numbers as your team grows.
With OpenPhone, every new member of your plan comes with a free US, Canadian, or toll-free phone number. That way, you can expand your network without installing new hardware. You’ll also get all the features you’d typically expect from a traditional PBX, including call forwarding, custom voicemail greetings, and call recording. Plus, we provide additional features like integrations and automations — so you can save time on repetitive tasks and focus on more impactful work.
Want to try out OpenPhonefor yourself? Sign up for a seven-day free trial today.
Meagan is a professional writer in VA that has covered business phone communication since 2021. If she’s not helping companies navigate VoIP technology, she’s helping companies craft their own stories.