PBX vs. VoIP Seems Simple. And Then You Try to Buy It


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Phone calls can mean the difference between making or losing money. That’s why you need to pick the right phone system for your business.

In that case, you may be stuck between the two most popular choices—PBX or VoIP.

PBX handles calls using traditional landlines in your office, while VoIP manages calls over the internet.

At first glance, PBX and VoIP may sound like two different phone systems. But it gets more confusing when you see terms like IP PBX, Cloud PBX, and SIP gateways, which are all designed to enable digital VoIP calls over an analog PBX. 

There’s a lot of technology, but keep two things in mind:

  1. Regardless of your current phone system setup, there is a way to set up what you want.
  2. With a modern phone solution, you’re never going to have to think about these questions again once you get set up.

With that said, let’s dive into the differences between PBX and VoIP. 

Why PBX Vs. VoIP Gets Confusing

The term PBX has stuck around even though business communication technology has changed a lot. 

In the past, PBX systems needed human operators to connect calls manually. These operators had to plug and unplug cables to make calls, and businesses had to employ many of them to keep operations running smoothly.

Then came PABX (Private Automatic Branch Exchange). This technology automated what used to be manual PBX systems, getting rid of the need for human operators. Instead of relying on people to connect calls, PABX systems used automatic switches and routers to make calls faster and more efficient.

PBX is a traditional telephone system that operates on analog lines. It allows internal communication within an organization and connects calls to the PSTN (Public Switched Telephone Network). 

Essentially, this lets your calls travel over wires to connect you with the person on the other line. 

Even with all these technological changes, we still call it PBX because it’s short, and businesses have been using this term for years to describe their private phone systems. When people think of PBX today, they expect certain features such as:

  • Options for Multiple Phone Numbers: One business can manage many phone numbers, each for different people or departments.
  • Phone Menus: This allows users to hear menus that guide them, like options to press 1 for customer support.
  • Call Routing Features: This ensures that calls are directed to the right extensions or departments.
  • Call Administration: Certain settings allow businesses to track and monitor call details as well as overall call volume.
  • Voicemail: This allows callers to leave messages when the person they’re calling is not available.

There are other features, but these are the major ones. This basic feature set is what PBX means today—absolutely no one is trying to go back to manual switch operators. 

Some businesses still use PBX systems connected to the PSTN, although technically, these are PABX systems. These older phone systems offer some key advantages:

  • Reliability: Traditional PBX/PABX systems are known for being very reliable. They work even during internet and power outages.
  • Quality of Service: They often provide consistent, high call quality, which can be important for certain industries.
  • Security: These legacy systems can be kept isolated from the internet, reducing the risk of cyberattacks.

That being said, legacy phone systems have their shortcomings. 

The physical hardware makes them expensive and clunky to maintain and operate. When there are issues, you’ll likely have to call in a technician, which means possible downtime. And it gets even tougher if you want to employ a remote workforce.

VoIP Services Have a Software PBX

VoIP, or Voice over Internet Protocol, allows you to make phone calls over the internet instead of using traditional phone lines. It turns your voice into data and sends it online to the person you’re calling, allowing you to communicate via the internet connection. 

In the past, old-fashioned phone systems relied on physical equipment, like switchboards and cables, to connect calls within an organization. These systems were expensive to set up and maintain, and they were less adaptable for businesses with changing needs.

In comparison, VoIP is cheaper and more flexible, and you can use it on various devices like your computer, smartphone, or special VoIP phones.

On top of that, VoIP services often include features like call forwarding, voicemail-to-email, video conferencing, and more.

Because VoIP is software, you can administer VoIP phone systems on a computer. That means everything that used to be hardware sitting in a control room is now able to be configured with a mouse. 

Take Nextiva, for example. Inside the dashboard, you can easily configure and customize your phone system. 

You can set up and adjust call routing, voicemail settings, and user extensions all in just a few clicks.

Nextiva dashboard showing activity, users, locations, devices, and advanced routing.
Source – Nextiva Voice admin portal overview – Nextiva Voice (NP3)

So next time you come across terms like Cloud PBX or IP PBX, it’s important to understand that these are just VoIP solutions that still carry the “PBX” label. 

They offer all the features you’d expect from a traditional PBX system but instead use the internet.

Cloud PBX is hosted in the cloud and uses the internet to administer calls, eliminating the need for on-premise hardware and maintenance. 

On the flip side, IP (Internet Protocol) PBX is an on-premises phone system that uses a company’s own private network to manage calls. 

The key difference is the deployment: Cloud PBX is hosted off-site, while IP PBX is an in-house system. While they’re different in nature, both use the internet for calls.

Advantages of VoIP vs. PBX

When comparing VoIP to traditional PBX systems, it becomes clear that VoIP offers several significant advantages that modern businesses can’t ignore.

1. VoIP Saves You Money 

VoIP typically involves lower setup and operational costs than traditional PBX. It removes the need for expensive hardware, maintenance, and long-distance charges.

Installing an on-site PBX is a hefty cost and requires a huge upfront investment. A steady power supply, a huge switchboard and cabinet, phone lines, and other hardware are needed. That easily can cost several thousand dollars, if not more. 

With VoIP, the hardware investment is typically much less. You likely will only need to invest in IP Phones or headsets, assuming your business already has computers with an internet connection. You may also want to upgrade your internet plan, depending on your expected call volume.

2. VoIP Helps You Scale 

The best VoIP phone services are highly scalable, letting you add or remove users easily as your business grows or changes. If you’re running a large call center or team, you may want to consider upgrading your internet plan, but that’s a simple process.

With traditional PBX, scaling up requires significant hardware investments. You’ll need to add more phone lines and set up new hardware as your business grows.

3. VoIP Lets You Go Remote 

VoIP empowers remote work by allowing team members to make and receive calls from anywhere with an internet connection. You can handle calls with just a laptop, meaning you can hire team members globally. 

Because they rely on phone lines and physical hardware, traditional PBX systems tend to tie businesses to central offices.

4. VoIP Offers More Advanced Features 

VoIP phone systems offer many advanced features, including voicemail-to-email, call forwarding, video conferencing, call analytics, call recording, and more. 

Traditional PBX systems won’t give you the same luxury.

Many VoIP software solutions offer a built-in dashboard to provide insights to make faster, better decisions for your business. You can receive call reporting to track phone activities, analyze trends, or even record calls for training purposes. 

VoIP dashboard with a summary of calls shown.
Source – Call Analytics Add-On: Tracking & Reporting | Nextiva

Many business VoIP providers even offer multi-party calling features. This allows organizations to hold internal conference calls using their built-in VoIP phone system, meaning they won’t need to pay for a separate conference call software subscription. 

5. VoIP Providers Offer Security Features 

VoIP providers usually offer high-level remote monitoring and real-time security alerts. Furthermore, VoIP systems can use strong encryption protocols to protect the confidentiality of voice data as it travels over the internet. Encryption ensures that calls cannot be easily intercepted or eavesdropped.

Beyond that, they can be secured with intrusion detection and firewall systems to protect against external threats and unauthorized access. 

No technology is infallible, though, so you’ll want to make sure you have solid security protocols in place and that your staff is trained in following smart cybersecurity practices, like using strong passwords.

PBX systems are usually pretty secure, so this isn’t necessarily a feature of VoIP that PBX systems don’t have. However, because traditional PBX systems require physical hardware and phone lines, you may need surveillance to make sure nobody tampers with the phone lines.

6. VoIP Connects With Other Business Apps

If you want to streamline your workflows and boost customer experience, VoIP systems are the way to go. They seamlessly integrate with other software applications like Customer Relationship Management (CRM) systems.

Let’s say a rep from your team receives a call from a customer. If your customer is already in your CRM database, it’ll automatically pull the caller’s information. That way, the agent can better assist the caller with their needs and add further notes to the records. 

Software integrations consolidate data from different communication channels into a single platform, making it easier to manage and analyze. This provides valuable insights into customer behavior, call patterns, and performance metrics.

7. VoIP is More Reliable 

Many VoIP providers offer reliable service with redundancy to ensure uptime. They often have multiple data centers in different geographic regions, meaning that in the event of an outage or unexpected failure at one center, traffic can be redirected to another center. This, in turn, minimizes downtime.

Of course, VoIP systems aren’t immune to power outages or poor internet connections. You’ll want to ensure your remote team has access to a steady connection. 

Also, the data is baked in with the rest of your internet traffic. So, if your internet is slow, or if you have too many apps open on your computer, that can cause dropped calls or delays in sound output. 

That being said, VoIP systems tend to be far more reliable than PBX. Additionally, PBX can be a pain to deal with if issues arise. If you don’t have an experienced IT department to troubleshoot issues, you may need to call in a technician.

Installing VoIP Over PBX

If you’re considering VoIP but your company already has existing phone lines, you don’t have to completely switch your communication systems. 

If your business currently operates with a traditional PBX or ACD (Automatic Call Distributor) you can still benefit from VoIP technology by implementing a SIP (Session Initiation Protocol) gateway.

Adding SIP to a legacy PBX or ACD system is a way to reduce costs and add features. 

A SIP gateway is a device or software that acts as a bridge between your analog PBX system and the digital VoIP network. It converts traditional phone calls into digital data packets, allowing them to travel over the Internet. With this integration, companies with legacy PBX systems can take advantage of VoIP technology. 

One major advantage of SIP trunking over traditional telephone lines is cost-effectiveness. 

With a traditional phone line, you would have to pay for extra lines you aren’t using and incur high charges for international or long-distance calls. 

SIP trunking allows you to pay for the exact number of lines you need, reducing unnecessary expenses. And best of all, you’re usually charged only on a per-user basis.

It also eliminates the need for physical telephone lines, which are costly to install and maintain. 

Scalability is another strong point for SIP trunking. It’s much easier to add or remove lines as your business needs change. 

Traditional PRI (Primary Rate Interface) lines require hardware additions. When a business needs more phone lines, you’ll need to install new equipment to the phone system to accommodate these extra lines. 

A SIP gateway lets you adjust the number of lines without all the hoopla.

And you can access a host of modern features while reducing costs. VoIP technology offers advanced call management, voicemail-to-email, call recording, and more, allowing businesses to improve communication capabilities.

VoIP phone systems are the better option for just about most businesses. With the ability to manage calls online, VoIP is more cost-effective, flexible, and scalable for businesses of all sizes. 

Even if you already have legacy PBX systems in place, you can use SIP gateways for a seamless transition to VoIP.

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