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Thomas Han

August 8, 2017

What is a PBX?

A PBX (Private Branch Exchange), is the hardware and/or software system that powers an organization's phone lines and routing functionality. PBX systems can be cloud based, on-premise, or a hybrid of both.

Ever wonder how companies could make thousands of people reachable via a single telephone number? The magic is all in Private Branch Exchange, also known as PBX. PBX is a remnant of the bygone era of switchboards and landlines.

So what is a PBX?

A PBX (Private Branch Exchange), is the hardware and/or software system that powers an organization’s phone lines and routing functionality. PBX systems can be cloud-based, on-premise, or a hybrid of both.

A PBX system takes calls from main trunk lines and routes them, creating a private phone network for managing the hundreds if not thousands of calls that come into a company’s main number.

Related:What is a Cloud PBX?

Hosted PBX vs On-Premise PBX

Traditionally, PBX systems were physically located and maintained by each company onsite. This represented a massive investment in telecom infrastructure and could include servers, switches, routers, and other complex equipment. Thankfully, like most vestiges of the pre-internet era, all this changed with advances in cloud computing.

A hosted PBX is the same as a PBX sans the hardware infrastructure and costs associated with maintaining a physical, onsite private telecom network. By leveraging Voice over Internet Protocol (VoIP) technology, hosted PBX services are able to switch, transfer, and route calls by utilizing virtual servers located in the cloud. This provides many advantages over the traditional, legacy PBX infrastructure.

On-premise PBX systems offer very little flexibility. Since all of the functions are hardware dependent, each call flow path requires some hardware investment.

Traditional, or on-site PBX systems make it difficult for companies to change or modify their systems once they are deployed. This can be due to several reasons including lack of expertise within their own staff to the complexity of the hardware managing the network itself.

What is the benefit of using a hosted PBX?

The answer to the question as to why a company would choose a hosted PBX rather than an onsite hardware solution is simple – flexibility and cost.


A hosted PBX system allows easier customization of call configurations through an online interface, whereas an on-premise system would require replacing numerous pieces of equipment that a company would have to pay to develop, deploy, and maintain.

Dynamic call routing, forked call flows, custom IVR menus, and even fax and text messaging (SMS) for multiple users are all managed through web-based portals, which are designed to be intuitive, easy to set up, and easy to modify.

What's more, a hosted PBX system can support numerous office locations and remote users under one platform, whereas a traditional PBX system can only support the one location.


Unlike a traditional PBX system that requires a significant capital investment upfront, a hosted PBX system can be deployed almost immediately with minimal setup costs. There's no hardware to purchase or manage, as the PBX provider manages all the infrastructure on your behalf.

While most hosted PBX providers charge per user, Telzio subscriptions are usage-based and include free unlimited users. This way, you don’t end up paying for more capacity than you need.

Hosted PBX systems allow companies to offload risk that they would have had to shoulder should they want a PBX system onsite, but still have all of the capabilities of such a system with much more flexibility. This also means that as technologies improve in the future, subscribers to services like Telzio will see continual improvements without needing staff or capital to upgrade hardware.