Outside of the IT world, terms like Hosted PBX are still a mystery to many small business owners. More easily understood are applications like Skype, and even the term VoIP. To understand how VoIP plays a role in business telephone systems, we’ll be exploring the basics of a Hosted PBX system, beginning with the meaning of a PBX.

What is a PBX?

PBX stands for Private Branch Exchange which is a piece of hardware (telephone box) that makes connections among the internal telephones of a business and connects them to the PSTN (Public Switched Telephone Network) or public telephone network. This is done via trunk lines, otherwise known as phone lines. A PBX can incorporate multiple telephones, fax machines, modems and more, and the term extension is used to refer to any end point on the branch. Extensions are also commonly referred to as the 3 or 4 digit number associated with an individual telephone within the business phone system. For example, your telephone number might be 613-355-1234 extension 123. Depending on the configuration of your PBX, you can transfer phone calls between extensions and reach extensions individually through the Auto Attendant: the automated greeting played to callers when they first call in to your business.

The Hosted in Hosted PBX

A hosted PBX >> provides all of the same functions (and many more) as a PBX however the system is delivered as a service. This means you can eliminate the need to buy and install a physical PBX (phone box) since the hosted PBX is provided and managed by your service provider. Instead of buying a PBX, installing and configuring it, with a hosted PBX system you are only required to purchase telephones and have an internet connection. Not only will your business save money by eliminating the need to buy a PBX, but it’s estimated that yearly updates and repairs can cost between 10-20% per year of the original purchase price of the traditional PBX. With a hosted PBX system, updates are managed by the service provider without additional cost to the customer. This is only one of the ways in which the longevity of a hosted PBX system can benefit your business.

Longevity and Scalability

Any type of investment in telecommunications or IT can impact how you operate your business and can impact your business for years to come. A major benefit to a hosted PBX telephone system is its ability to grow with your business; meaning telephones and phone lines can quickly and cost effectively be added or removed from your system whenever you need them. To read more about the benefits of hosted PBX, read Why Companies are Switching to Hosted PBX >>