A PBX (Private Branch Exchange) phone system gives businesses their private phone network and other calling and business communication features that improve your team's workflow.

But what exactly is free PBX, how does it work, and which type and provider—is best for your business? Continue reading to find out.

What Is A PBX Phone System?

A private local telephone exchange (PBX) phone system enables businesses to facilitate internal and external voice calls on their local network. PBX essentially creates a miniature phone network owned and operated by the company that employs it, which means that all internal communication between in-network users and devices is accessible.

Businesses can use PBX to limit or avoid purchasing additional phone lines from third-party providers, instead opting for in-network business phone numbers or extensions.

How Does A PBX Phone System Work?

A PBX phone system connects, switches, and routes phone calls to their destinations while providing an advanced business communication features that traditional landlines or residential phones do not offer.

Outgoing and incoming calls are managed with SIP Trunking or VoIP, depending on the type of PBX service you select (Voice over Internet Protocol.) Both on-premises (on-site) and cloud-based PBX are available, as is a hybrid.

What's The Difference Between PBX And VoIP?

The primary distinction between PBX and VoIP is that the real PBX is a type of business phone system, whereas VoIP is the technology that allows the voice calls to be made over the Internet. PBX employs VoIP technology, SIP Trunking, and the PSTN to build an interconnected internal telephone network that includes all your company's calling devices. (Depending on the PBX solution, these "phones" could be desktop computers, mobile devices, or desk phones.)

While most PBX providers now provide VoIP calling (and vice versa), VoIP phone systems do not require PBX to operate.

How To Choose A PBX System for Business?


Consider the following factors when selecting a PBX system for your company:

  • On-premises versus off-premises/hosted service.
  • Total cost/budget (monthly service fee, setup/installation fee, equipment/hardware-costs, international and long-distance dialling fees, add-on features, and so on).
  • Features and communication channels that are available.
  • Types of phone numbers that are available (Local, international, toll-free, vanity numbers).
  • Pricing structure (pay-as-you-go, bundled minutes, monthly plans, annual contracts, and so on).
  • User-friendliness, user training, and customer service.
  • Guaranteed 99.9% uptime, network monitoring, and security certifications.


Although PBX systems are still used, most businesses have moved away from analog and on-premise PBX phone systems and toward cloud-based/hosted PBX. They gain the advantages, advanced features, and cost savings of VoIP telephony and SIP Trunking without maintaining and upgrading their in-house phone systems.