Is a PBX Viable For Business Today? Yes, But Not Every Type

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PBX, or Private Branch Exchange, is a phone system that acts as a company’s central nervous system for communications. The term harkens back to the olden days of switchboards and tangled cords, but the technology has advanced significantly from the hardware-based systems of the past.

Today, PBX systems use online and cloud communication technologies to offer more robust and versatile communication solutions. However, there are also different types of PBX systems, so finding the best one for your business depends on the pros and cons of each type.

PBX flow chart from Nextiva for how to setup your telephone network with a PBX.

Types of PBX Systems

The three different system types that you should take a closer look at are: traditional PBX, SIP PBX, and hosted PBX.

Traditional PBX

A traditional PBX, also known as legacy PBX or on-premise PBX, is a phone system that employs a public switched telephone network (PSTN) to physically connect calls through copper wire.

With a Legacy PBX, you can:

  • Facilitate seamless internal communication within a company as well as make external communication to the global telephone network
  • Tailor software settings like call routing, voicemail settings, and other features to meet specific operational requirements
  • Integrate the phone system with your company’s existing network infrastructure
  • Enable advanced call routing, handling rules, and customized interactive voice responses (IVR)

Traditional PBX pros:

  • Companies with unique or proprietary communication systems can easily integrate it with a traditional PBX
  • Its advanced customization options for call routing, voicemail, handling rules, and more are great for companies that need granular control over these settings

Traditional PBX cons:

  • It doesn’t work well for remote or hybrid work models without additional third-party solutions
  • The hardware setup for this system requires a hefty upfront investment
  • It requires dedicated physical space for the hardware and may need on-site maintenance personnel to manage and troubleshoot the system
  • As technology continues to advance, an on-premise PBX system may become obsolete


SIP PBX, or session initiation protocol PBX, uses trunking to enable voice over internet protocol (VoIP). Trunking is a way of bridging traditional telephone systems and modern VoIP services, enabling companies to use their existing telephone lines and equipment to send and receive calls via the internet.

Here’s what an SIP PBX can do:

  • Facilitate VoIP and other media streaming services, replacing traditional phone lines
  • Enable modern telephone features such as call forwarding, voicemail-to-email, auto-attendant, and IVR, which can enhance business operations
  • Integrate with other business systems, such as customer relationship management (CRM) software, improving workflow efficiency

SIP PBX pros:

  • Easily scalable to accommodate business growth
  • Allows remote employees to stay connected from wherever they are, as long as they have an internet connection
  • Is more cost-effective than a traditional PBX because it requires less hardware and uses VoIP, which can lower the cost of international calls
  • More reliable and flexible than traditional PBX systems while also being easier to manage because there’s less hardware to maintain

SIP PBX cons:

  • Requires a stable, high-speed internet connection to work and sufficient bandwidth to handle data traffic
  • May need trained IT staff for setting up and maintaining
  • Can experience latency and jitter, which could result in lag time between people talking and choppy or garbled audio
  • May be vulnerable to cyber-attacks such as hacking and eavesdropping
  • Has potential compatibility issues with traditional phone systems

Hosted PBX

A hosted PBX system, sometimes called cloud PBX, is a cloud-based, hosted phone system managed off-site by a service provider.

A hosted PBX can:

  • Support remote workers and mobile users to keep employees connected wherever they are
  • Integrate voice, video, messaging, video conferencing, and even file sharing—making it an all-in-one solution for communication and collaboration
  • Support modern phone features like voicemail-to-email, auto-attendant, custom greetings, call forwarding, call recording, and IVR
  • Integrate with other business applications such as email platforms and CRMs, which expands functionality and increases work productivity
  • Support business continuity in the event of a disaster through features like cloud redundancy and automated failovers
  • Provide a built-in directory service, making internal communications simpler
  • Provide real-time analytics to monitor call quality, usage, and system performance

Hosted PBX pros:

  • Easy to add or remove lines, extensions, and features without dealing with hardware
  • Less expensive than traditional or SIP PBX because the service provider handles hardware maintenance and software upgrades
  • Predictable monthly billing makes budget management easier
  • Easy to set up and manage through user-friendly web interfaces, requiring less technical expertise compared to traditional or SIP PBX systems
  • High reliability, as most providers have redundant servers and networks to ensure service continuity
  • Can be more energy-efficient and environmentally friendly as it leverages a shared cloud infrastructure

Hosted PBX cons:

  • Ongoing subscription fees can be high
  • Calls can experience latency or jitter if the hosted PBX doesn’t use the same internet service provider as your company
  • Depends on the service provider for maintenance and troubleshooting
  • Requires a stable, high-speed internet connection
  • Vulnerable to hacking if not properly secured by the service provider
  • May offer fewer customization options compared to traditional and SIP PBX
  • Risks potential downtime if the service provider experiences technical issues

Choosing the Right Type of PBX Is Easy

A hosted PBX is the best option for almost every business, as there are even more benefits to consider.

  • It offers future-proofing: Technology changes, so having a phone system that can roll with these changes is key. Hosted PBX systems are far more flexible than the other options, allowing your communication system to adapt to modern tech advancements and stay up-to-date.
  • It enhances the customer experience: With features like call analytics, call queues, and call monitoring, hosted PBX systems can help businesses improve their customer service operations. These features provide insights into call patterns, help manage call traffic efficiently, and ensure that customer inquiries are handled professionally.
  • It supports innovation: As cloud technology continues to evolve, hosted PBX systems offer a platform for innovation. New features and technologies can be rolled out faster compared to traditional systems, keeping businesses at the forefront of communication technology.
  • It allows for multi-site connectivity: A hosted PBX system can unify communications across all sites for companies with multiple locations. This can simplify management and ensure consistent communication experiences for both employees and customers.

While your individual use case may call for a traditional or SIP PBX, the many benefits of a hosted PBX system make it the top choice for most businesses. It’s a forward-thinking solution that covers current communication needs and sets businesses up to welcome future improvements in the telecom world.

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