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What is a PBX Phone System?

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Looking for an upgrade for your business phone system? One that reduces calling costs but enables better and reliable connection? A private branch exchange or PBX system works alongside your current telephone network. However, it has the potential to give you access to high-quality voice and video communication. In this post, we explain what a PBX phone system is and how it can benefit your business.

Private Branch Exchange (PBX): Definition & Guide

A private branch exchange is a telephony solution that enables communication between users of a private network. A PBX system works with your business’ telephone network and handles forwarding and routing features for calls. Companies use private branch exchange systems to reduce monthly phone bills as it operates internally and uses fewer phone lines.

Most PBX providers will offer you communication features along with the system. These features include voicemail, cloud IVR, custom messages, call transfer, and extensions.

Before these systems worked only through plain old telephone service lines. However, now, you can connect your PBX with VoIP technology, also called IP PBX. Voice over IP technology uses the internet instead of analog phone lines to make and answer calls. Both of these systems together will give you the ability to use SIP trunking as a feature that offers voice and video calling at inexpensive rates.

Setting up a private branch exchange system, however, needs expertise. To install PBX for your office, you will need specific hardware, physical space, and an IT team for maintenance. Costs for these can increase quickly. Thankfully, cloud PBX functions as a cost-effective solution.

4 Reasons for Businesses to Use a PBX System

So, why should your business consider getting a private branch exchange phone system? There are many benefits to using a PBX system, which include:

  1. Running a call center: PBX systems can hold inbound and outbound calls in a queue and transfer them to the right department when the time comes.
  2. Connecting multiple locations: a PBX system can route users to employees, agents, or departments in another office location, enabling team collaboration.
  3. Transferring calls through extensions: calls can be transferred quickly and with ease, without the worry of calls being dropped.
  4. Custom call management: Handle and route calls according to your needs and desires by setting rules within the system.

With advancements in telecommunications, there are a few different private branch exchange systems to choose from. The most common are hosted/cloud and on-premise/IP PBX. Let’s delve into these types first.

Understanding the Difference Between PBX, EPABX, and IP PBX

There are many terms for PBX going around: PBX, IP PBX, PMBX, PABX, EPABX, to name a few. And it is not always clear what each of these terms means or which type of phone system is right for your business. Let’s try to break this down so you can make a more informed decision when it comes to your business PBX system.

What is EPABX?

Electronic Private Automatic Branch Exchange — also known as PABX and EPABX — is a PBX system or private telephone network used for internal and external business communication. Employees share limited resources and use a single phone line for business-related communication. This helps reduce phone system expenses.

The main difference between PBX and EPABX systems lies in who operates the system. PBX systems used to be (and in some cases, still are) human-operated or manual systems and are also known as PBMX.

PABX systems, on the other hand, use computers to automate the switching process within the system, also known as Private Automatic Branch Exchange. EPABX systems don’t need an operator and instead use a computer to manage and transfer calls effectively.

pbx flow chart

IP PBX: What is it and How Does it Work?

IP PBX takes the private branch exchange system to the next level by using VoIP technology and cloud communications. IP PBX phone systems use VoIP technology to transfer or direct calls from one end to another by converting analog voice signals into digital signals. The VoIP provider manages the initiation (beginning) and termination (end) of each call.

IP PBX uses SIP technology, the standard for VoIP phone systems. Because of this, your business can make use of SIP trunking to utilize multiple voice channels or SIP channels without purchasing separate lines. And since SIP trunks are location-agnostic and highly scalable, you can set up or move offices or work remotely, as and when needed within minutes.

With IP PBX, you can expect:

  1. Low communication costs — This PBX system is inexpensive compared to analog alternatives. You can choose between different plans (metered and unmetered) of SIP trunking services to find one that works for your business needs.
  2. High scalability — Add/remove users and lines as needed without having to change your system or plan.
  3. Low equipment costs — Use your existing hardware and equipment. No need to teach or train employees in using new systems.
  4. Cloud reliability — By using a cloud-based system, when your PBX system fail, the cloud system’s settings will automatically route calls to predetermined locations or lines to ensure uninterrupted service.

On-Premise vs Cloud PBX

There are two different types of private branch exchange systems: Cloud PBX and On-Premise PBX. And choosing between these two phone systems depends on a few factors:

  • What do you need from your phone system?
  • Do you want to connect multiple office locations through the system?
  • What communication features do you need?
  • What is your budget?
  • Do you have or need to hire an IT team?

The answers to these questions can help you determine which PBX phone system is right for you.

On-Premise Private Branch Exchange System

An IP or on-premise PBX system refers to a system that is installed within the office, is IP-ready, and is handled and maintained by you. You will need an experienced IT team to handle such a system. If you want a system that you can control and manage and you have the budget for it, then an on-premise system may be your solution.

You can even choose to combine your PBX with VoIP tech and run an IP-PBX system instead. This way you can make and receive calls through the internet instead of using analog phone lines. Doing so results in better phone quality and access to VoIP features such as call forwarding, transfer, etc.

Cloud PBX System

A cloud PBX is what it sounds like: a PBX system that works over the cloud. This means that it does not need a physical space in your office. Other terms for cloud PBX include hosted or virtual PBX systems. A hosted or cloud PBX system works similarly to an on-premise system, except that it is operated by your provider.

Therefore, you do not need to worry about installation and maintenance costs or even hiring an IT team to manage the system. In fact, you simply sign up for the service, complete the minor set-up, and start using it.  They take care of the system and all you need to do is use it. One factor to note is that your business will be reliant on your provider and won’t have as much control as with an on-premise system.

With hosted private branch exchange, calls made are routed to the provider and then the destination. Cloud PBX systems are VoIP-based systems that help you take advantage of cloud communication features such as call forwarding, recording, IVR systems, outbound calling, advanced routing, and more.

Choosing Between Cloud PBX vs On-Premise PBX

So, what are the main differences between these 2 types of private branch exchange phone systems?

On-Premise Cloud
Customizable Customizable
Operated on-site by you Hosted by your provider
May use VoIP tech Uses VoIP tech; Needs a broadband connection
Low monthly costs; High upfront costs Low monthly costs; No upfront costs
Controlled and managed fully by you Little to no control over how it operates
Limited calling features Variety of calling features
Physical space required; closet or room No physical space required
Installation and regular maintenance required No installation or maintenance needed
Costly maintenance No maintenance costs
Experienced IT team needed No professional IT experience needed
Limited scalability On-demand scalability
Can handle SIP trunking for high-definition voice and video calling Can handle SIP trunking for high-definition voice and video calling

The bottom line is that if you want a system that is wholly controlled and managed by your in-house IT team then an IP-PBX is the choice for you. However, if you don’t want to worry about the hassle of running and maintaining your phone system, then go with the cloud.

Get a PBX System for Your Business

Here at United World Telecom, we can help get you set up with a private branch exchange system that makes call management simple and efficient. You can sign up on our website or speak with our experts to learn more! Call us at 1 (877) 898 8646 to see how we can assist your specific business.

What is the Public Switched Telephone Network (PSTN)?

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Here we will look at the public switched telephone network in detail. We will highlight important terminology, technology involved, costs, and alternatives to consider.

What is the Public Switched Telephone Network?

Public Switched Telephone Network or PSTN is a telephone service that connects various residents and businesses through underground copper wires. This type of phone service is also called plain old telephone service (POTS), a landline, and fixed-line telephones. Furthermore, this phone service has been widely used across the world for generations. However, advancements in telecommunication have resulted in a decline in demand for PSTN lines.

PSTN Terms Explained

To understand how PSTN works, you first need to familiarize yourself with important PSTN terminology. Here are terms to know:

1. Circuit switching
For voice to move from one point to the next, it needs to be converted into voice signals. These signals are transmitted through copper wires. However, to transmit to the destination successfully, they need a dedicated switch. Circuit switching is the act of operators plugging wires into a common panel so as to establish a connection between the two parties. They do so by plugging the caller and receiver’s wires into the same wire (also called a trunk).

In simpler words, when calls are made, the switches create a circuit between two phones and maintain the connection for the duration of the call.

2. Central office
A central office (CO), local exchange, or switching exchange consists of one or more exchanges. In fact, it may have as many as 10,000 lines. A central office hooks its subscribers to a PSTN line. All phones within an area connect to a local exchange located in the area.

When a local call is made, the call is sent to the local exchange and is then routed to the supplier. Since this is a local call, the call does not leave the local exchange.

Example: Calling a business located in the next building or block from your building.

3. Tandem office
A tandem office or junction network covers a larger geographical area and hosts multiple local exchanges. When you make a local call to someone in a nearby suburb or region of the same city, the call goes to your local exchange then to the tandem office which will then route it to the local exchange of the receiver’s location.

Example: Calling a business located in the next suburb but within the same city.

4. Toll office
A toll office is responsible for national long-distance switching. All tandem offices connect to a toll office. When you call an office or resident in another city, the call is switched via the toll office. This was common before the Bell System Divestiture.

Example: Calling a business located in another city or state within the same country.

5. International Gateway
The international gateway is responsible for international switching. This makes long-distance and international calling possible.

Example: Calling internationally.

what is PSTN
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How Does a PSTN Line Work?

A public switched telephone network combines phone networks across the world. These include:

  • Telephone lines
  • Cellular networks
  • Fiber optic cables
  • Switching centers
  • Cable systems

All these elements together make it possible for phones to communicate with each other. In other words, on dialing a contact, the call flows through a network and reaches the appropriate destination. This is the journey your call takes when using a PSTN line:

1. When you dial a number, your phone converts sound waves into electrical signals which are then transmitted to the terminal over a cable.

2. The terminal sends these signals to the CO.

3. The CO routes the call through a fiber optic cable to the final destination.

4. The call is routed to a CO or tandem office based on the type of call.

5. When the call reaches the appropriate destination, it is changed back to an electrical signal and routed to the terminal which then routes it to the appropriate number.

6. When the call reaches the receiver, the electrical signals are transformed back into sound waves.

Now while this journey seems complicated, it all occurs only within a few minutes.

PSTN Service for Business

When setting up a PSTN system for a business, you will be required to get a line for each employee. A small business with less than 10 employees might find this phone setup suitable. However, once your business size increases, you will need more lines leading to more costs. Generally, PSTN phone services charge about $20-$30 per month. This, however, does not factor in costs for set-up, maintenance, additional lines, handsets, and communication features.

Large corporations with more than 40 employees may find a private branch exchange (PBX) system more suitable. A PBX system converts your business into a central office. It also makes features like call transfer, conferencing, IVR, voicemail, etc., accessible. External calls are routed to your local exchange. And internal calls route through your PBX.

Most businesses prefer a PBX system to manage calls efficiently. However, an in-house system can lead to further expenses such as:

  • High set-up and installation fees
  • Software and hardware costs between $2000-$4000
  • Monthly in-house maintenance (hiring of an IT team, regular updates, etc)

All of this can lead to a heavy monthly bill.

PSTN Alternative: Hosted PBX and VoIP

However, there are alternatives such as hosted PBX and VoIP phone systems. Hosted PBX is a PBX service run by a third party business. You will not be responsible for regular maintenance or need to hire an IT team. Plus installation fees are much lower without the need to install heavy software and hardware on-site.

Additionally, you may also consider a voice over IP or VoIP phone system that routes calls through your internet or DSL connection. VoIP uses the internet instead of cable wire and therefore, you do not require a local exchange to make VoIP to VoIP calls. A call to a PSTN line, on the other hand, will require an exchange.

Additionally, instead of using circuit switching, business VoIP uses packet switching. When a number is dialed from the VoIP line, voice is converted into digital data or a packet which is then sent to the router. This router transmits the packet to the router closest to the recipient. This means that data is sent and received when needed and a dedicated line is not required. VoIP and packet-switching make business communication cost-effective and boosts productivity.

Choosing a Business Phone Service

Deciding on a business phone service can be overwhelming. However, it is crucial to find the ideal system for your business needs. Call us to learn more about how our outbound calling service can improve business communications or whether PSTN is the service you need.

POTS: Plain Old Telephone Service Explained

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Wondering what POTS or plain old telephone service entails and whether that is the best  phone service for your business? Look no further. Here we explain how plain old telephone service works and the key terms to understand.

What is Plain Old Telephone Service?

Plain Old Telephone Service (POTS) refers to a phone line or traditional phone service which works through physical wires. This type of phone service enables analog voice transmission over copper pair wires. A POTS line is able to transmit voice messages across different countries and continents. Because of these abilities, POTS has been the standard phone service for individuals and businesses since its inception in the 1880s.

However, the creation of voice over IP or VoIP phone systems has seen a gradual shift to cloud communications, especially for business communication.

How Does a POTS Line Work?

Originally, transmission and communication between two points relied on an operator to connect them to the right place. With this technology, long-distance calling was more expensive than short-distance calling.

However, POTS automated the switching ability so that operators were unnecessary to the process. A POTS line works through copper wires connecting various points together. The phone service establishes a dedicated circuit between two points for the time of the transmission.

With a plain old telephone service, businesses are connected to central offices located nearby. And the central office, in turn, connects to long-distance offices or residents. This made communication transmission more digital and less manual. And it reduced the cost of long-distance communication. To connect parties, a call routes over one or more switches operating on local, national, or international levels.

Plain Old Telephone Service Technology

Some common terminology associated with POTS phone system technology are:

1. Circuit Switching
Now voice by itself cannot move through a POTS line. Sound waves need to be converted into electric signals to pass through the network. Copper wires are able to transmit analog signals, however, they need a dedicated switch to travel through. While dedicated circuits are reliable, the line is reserved for only one call.

Circuit switching required operators to plug wires into a common patch panel to connect two parties. Connections that required two exchanges would need two operators to plug the caller and receiver’s wires at the same time into the same wire called a trunk.

Then came automated switching which worked by responding to signals from a calling device. This type of switching eliminated the need for operators.

This switching was later replaced by the crossbar switch which is an assembly of switches among a set of inputs and outputs. This is a switch as each crosspoint. When this switch is closed, it enables the connection between one of the inputs and one of the outputs. This technology used common control networks that enable the switching network to conduct tasks such as call processing, monitoring, operation, etc. However, these devices were complicated and costly, as well, leading to the creation of the transistor.

2. Transistor
The transistor gave rise to digital networks enabling phone lines to carry digital signals in “packets.” Packets do not need the transmission channel to be an open and dedicated circuit. Instead, it transmits voice and other messages independently through the switches.

3. Modems
Modems were created to support the transmission of digital signals without overwhelming the system. Types of modems include:
DSL or Digital Subscriber Line enables data transmission over POTS lines. To do so, a transceiver connects to your PC and uses the local phone network to connect to an ISP network. This enables your use of the internet. This type of modem is useful to small businesses.
ISDN or Integrated Services Digital Network allows voice and data transmission over a regular phone line. To enable a connection, users dial in. And the fees for such service rely on the duration of the transmission. Large companies or businesses looking to expand in the future may find this modem more suited.

Plain Old Telephone Service for Business

Compared to VoIP or cloud phone systems, POTS may seem like the more expensive option. However, in areas where cellular or internet coverage is slow or inaccessible, copper lines are more reliable. When all else fails, you’ll find a POTS phone system to rescue you.

A basic plain old telephone service costs between $15-30 a month for unlimited local calls. One must keep in mind that other elements factor in as well, such as:

  • Setting up infrastructure — The larger the business, the more set-up costs, plus the technician and maintenance cost.
  • Additional features cost more — Intercom, call transfer, directories, etc.
  • International calling — If your business conducts international business on a regular basis, then this bill can grow quite a bit.

POTS vs VoIP

Most businesses in the modern era are switching from POTS to IP telephony such as a VoIP phone system or cloud PBX. Voice over IP uses your existing internet connection to transmit voice and data from one party to the next. VoIP makes it possible to connect remote offices and keep communications stable. It also comes equipped with features such as IVR, call forwarding, dynamic caller ID, softphones, etc. Plus, it reduces international calling costs as costs are not based on distance and time but on a monthly subscription.

Which is Right for Your Business?

Does your business need a POTS or VoIP phone system? This depends on what your business communications entail, the size and budget of your business, as well as future expansion plans. Speak with one of our experts to identify the right outbound calling service for your company. Call us at 1 (877) 898 8646 to learn more!