The IP PBX Guide: How IP PBX Systems Work

With the strides made in telephony technology, gone are the days where you needed copper wires to make and receive phone calls. If you’re looking to upgrade your business phone system, IP PBX is an option that lets you use hardware that you already have while taking advantage of newer technology. 

In this guide, we’ll explain what IP PBX is, how it works, as well as its pros and cons. Plus, we’ll talk about how IP PBX and VoIP are related and the best scenarios for using an IP PBX system. By the end, you should have a pretty good idea of whether or not an IP PBX system is right for your organization. 

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What Is IP PBX?

An IP PBX system is a solution that uses the internet to manage voice communications. IP stands for “Internet Protocol” and is a set of rules that govern how data is sent from one server to another. PBX, or Private Branch Exchange, is a private telephone network used within an organization that allows both internal and external communication. A PBX system also offers call routing, call transferring, and call queues. 

When we put those two terms together, we get a system that allows you to make internal and external phone calls that can be routed or transferred over the internet. 

Traditional PBX systems rely on physical lines to make calls, but with an IP PBX system, you can use your internet connection to make and receive phone calls. 

Some key components of IP PBX include:

• IP phones: IP phones use VoIP technology to make and receive calls over the internet. They connect directly to the internet
• Phone adapters: If your business owns a lot of analog phones, you may not want to purchase IP phones to replace them. In this case, you can instead purchase analog phone adapters. These adapters convert analog signals into digital packets, which allows calls to be made over the internet. 
• VoIP gateways: VoIP gateways convert voice traffic between the IP network and traditional telephone network. If you have many analog phones, you can use a VoIP gateway instead of purchasing individual phone adapters for each phone. VoIP gateways also help to convert analog data from external calls into digital data packets that work with your system. 
• IP PBX server: This is the central component of an IP PBX system. An IP PBX server is responsible for call routing, call management, voicemail, auto-attendant, and other telephone features. It basically controls the flow of voice traffic within and without the organization. 
• Network infrastructure: Network infrastructure is another important component of IP PBX. It includes routers, switches, firewalls, and other network devices that support the secure transmission of voice data over the IP network. 

How an IP PBX System Works

An IP PBX system allows you to make and receive phone calls over the internet. But you may be wondering exactly how it works. The behind-the-scenes process is fairly technical, but when using IP PBX, you likely won’t notice any difference from a traditional PBX system. 

Here’s a breakdown of how an IP PBX system works:

1. When you make a phone call on an IP PBX system, your voice is converted into digital data packets. 
2. These packets are then transmitted over the network to the server, which determines where to route the digital data packets. 
3. If the call is internal, it will go directly to the extension without further conversion. 
4. If you’re making a call to an external phone number, the call is routed through a VoIP gateway or a SIP trunk to connect to the Public Switched Telephone Network (PSTN). 
5. The digital data packets are converted to analog signals to work with traditional telephone networks. 

Pros and Cons of IP PBX Systems

IP PBX systems can be a great solution, especially if your business has a legacy system that you want to convert to digital. While IP PBX systems have a number of benefits, they also have some drawbacks. 

Here are some of the pros of IP PBX systems: 

• Cost savings: You can save a significant amount of money by switching from traditional telephone service to an IP PBX system. In general, an IP PBX costs much less than a traditional business phone system. There’s also usually less hardware to install and maintain, which in turn saves you money. Finally, long-distance and international call rates are much lower on an IP PBX system. 
• Advanced features: IP PBX systems often come with advanced features like voicemail-to-email, call forwarding, auto-attendant, and call recording. 
• Keep existing hardware: If your company has a legacy PBX system, an IP PBX lets you use most of your existing hardware while taking advantage of VoIP technology. 
• Reliability: With cloud-based service, IP PBX systems are quite reliable. That’s because VoIP providers use multiple data centers for redundancy. If one data center goes down, there are others still going to keep you communicating. In comparison, if your phone line is damaged, you are out of service until it is fixed. 
• Minimal changes: Because an IP PBX works so similarly to a traditional PBX, your employees won’t need to make significant changes when making phone calls. 

Here are some of the cons of IP PBX systems. 

• Setup costs: Setting up an IP PBX system may require investment in IP Phones, VoIP gateways, network infrastructure, and an IP PBX server. This cost can be substantial, especially for a smaller organization. 
• Security concerns: IP PBX systems are more vulnerable to security threats such as hacking or eavesdropping. Proper security measures must be put in place in order to prevent unauthorized calls, toll frauds, and compromised privacy. 
• Skill requirements: Managing and maintaining an IP PBX system requires technical expertise in VoIP, networking, and system administration. You’ll likely need to train or hire IT personnel to keep the system running well.  
• No remote work: While IP PBX does allow you to make and receive phone calls over the internet, it does not enable remote work. You have to be on-premise to use the business phone system. This can be a major limitation for businesses that rely on remote teams. 
• Scalability: When compared to cloud-based VoIP service, IP PBX systems are much more difficult to scale. That’s because these systems rely on hardware. Once your organization grows to a certain level, your system will struggle to keep up. This will likely require expensive hardware purchases to overcome. 

 

Cloud and Hosted PBX

IP PBX vs VoIP

While IP PBX and VoIP (Voice over Internet Protocol) both enable voice calls using an internet connection, they do have a number of differences. VoIP is the technology that enables voice calls over an IP network. VoIP can be implemented using a standalone VoIP service, hosted VoIP solutions, or integrated into your IP PBX system. It allows you to make and receive calls using an internet-connected device, such as an IP phone, softphone, or mobile app. This enables teams to stay in communication even when working in a remote or hybrid environment. Depending on the VoIP provider, VoIP service often comes with tons of advanced calling features as well as unified communication functionality. VoIP service is usually quite affordable, requiring no hardware to set up. 

In comparison, IP PBX refers specifically to an on-premise business telephone system that uses VoIP technology to manage internal and external phone calls. It includes a centralized IP PBX server that handles call routing, voicemail, call queuing, and other call management features. Because of its reliance on hardware, an IP PBX system cannot enable voice calls in off-site locations. It costs less than traditional phone service, but may cost your organization more than a phone system that is completely cloud-based. Additionally, IP PBX systems provide features similar to traditional PBX systems, but fewer features in comparison to hosted VoIP. For example, IP PBX systems do not come with video conferencing or instant messaging, while many VoIP providers do. 

When is IP PBX Best?

Now that you understand what IP PBX is and how it compares to VoIP, let’s talk about what organizations can benefit from IP PBX. IP PBX is an on premise system that lets you make and receive phone calls over the internet while taking advantage of PBX features. It can save you money compared to traditional phone service, but also comes with some costs. So when is IP PBX best? 

• Legacy systems: If your organization has a traditional PBX system, switching to IP PBX makes sense. You’ll pay less than with traditional PBX without needing to implement major changes. 
• Medium to large organizations: Businesses with a significant number of employees who need to communicate internally often benefit from the robust capabilities of IP PBX. 
• Multiple locations: Organizations with multiple locations can benefit from the centralized management and seamless communication provided by IP PBX. Employees in different locations can easily communicate by using extension dialing and internal voice calls. 
• Moving offices: If you’ll be moving offices, an IP PBX can be easily implemented in the new location. There’s no stopping phone service and starting at a new location. All you need to do to get your phone system up and running is install the IP PBX and networking equipment in the new location to get talking. 

When Not to Use IP PBX

While IP PBX systems offer a number of advantages for medium to large organizations, they may not be right for every business. IP PBX requires some hardware initially, which can be expensive. So when should you not use IP PBX?

• Small organization: If your business is on the smaller side with a limited number of employees, the complexity and upfront costs of an IP PBX may outweigh the benefits. Instead, a hosted VoIP solution will likely be more cost-effective and easier to manage. 
• Limited IT resources: Implementing and managing an IP PBX requires a lot of technical expertise. If your organization has limited IT resources, you may struggle to manage your system. Hosted PBX gives you all the functionality of an IP PBX system without the need to manage on-site equipment. 
• Remote team: If your organization relies on remote or hybrid teams, an IP PBX system is likely not right for you. Instead, you’ll want to look for a hosted or cloud-based PBX system to connect all your employees in their various locations. 

IP PBX: Is It Right for You?

IP PBX is a business telephone solution that combines the features of a PBX system with VoIP technology. It allows you to make both internal and external calls over the internet rather than over a traditional telephone line. With an IP PBX system, you can save money while also taking advantage of VoIP technology. If you have legacy equipment, a large organization, or multiple offices, an IP PBX may just be the business telephone system you’re looking for. 

However, IP PBX systems aren’t right for everyone. If you have a small organization with limited IT resources, or if you have a remote team, you’ll probably want to look into cloud-based PBX or hosted VoIP services. 

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