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PBX vs VoIP: What Is the Right Phone System For Your Business?

When selecting a reliable and functional phone system for your business, the two main options are VoIP and PBX. This article on PBX vs VoIP will highlight both systems, explain their differences, and help you choose the best option for your business.

What is VoIP

VoIP is a phone technology that uses the internet to make and receive calls. The basic process includes a router connected to a handset to manage calls. It works by converting the analogue signals into digital data packets that are sent to the VoIP service provider through the internet. Before reaching the receiver side, those data packets are converted back into analogue signals.

What is PBX

PBX or Private Branch Exchange is a type of private telephone network for a business. It connects all of the desk phones of an office to one telephone network, allowing employees to make internal calls for free.

Moreover, users can make internet calls without using the public telephone network (for free) and external phone calls using the landline system. The hardware required for a traditional PBX system includes a PBX server, phone handsets, telephone lines, cables and switches.

Modern PBX systems can be hosted on-site or as cloud-based solutions, reducing the need for extensive hardware. In addition to basic features like call forwarding and conferencing, they come with advanced features such as auto-attendants, interactive voice response (IVR) and call routing.

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Difference between VoIP & PBX

Let’s now touch a bit on the differences between VoIP and PBX.

Technology

PBX uses traditional analogue or digital telephony infrastructure to manage internal and external calls. It relies on physical copper wires which are characteristic of landline systems. It is connected to a local Public Switched Telephone Network (PSTN) through a landline as well.

In contrast, VoIP utilises the internet to transmit voice calls and leverage existing internet connections, reducing the need for extensive physical infrastructure.

Cost

One of the biggest differences between PBX and VoIP is the cost. Setting up a PBX system incurs high costs:

  • Purchasing and maintaining PBX servers, switches and physical phone lines.
  • Installation and maintenance of this equipment requires skilled technicians.
  • Long-distance calls on traditional landlines are expensive as well.
  • On-going costs of software licensing.

In comparison, VoIP can be installed and maintained at low costs because it utilises the existing internet connection. Of course, you have to upgrade it depending on your needs. A single VoIP call takes about 85 -100 Kbps of bandwidth.

  • Primary expenses include VoIP phones and a router to handle the VoIP calls.
  • Monthly subscription charges, which are usually lower than landline.
  • If you opt for a hosted VoIP system, you won’t even need a maintenance engineer.

Ease of scalability

VoIP beats a PBX system hands-down if we talk about scalability.

You can easily move to a higher-tier VoIP package if you want to. Adding and removing phone lines is a breeze as well. It’s as simple as calling your VoIP provider and getting the job done within minutes. This becomes particularly useful when there’s a sudden hike or drop in the demand for your product/service e.g. holiday seasons.

Adding a new phone number is quite convenient as well. You can assign a non-fixed number or shared virtual number to your remote workers anywhere in the world. Using the same VoIP plan in different offices is possible as well.

Moreover, if you want to upgrade your router for higher connectivity and speed, it’s not a hassle. Cherry on the top, new and custom features can be added to your existing VoIP line easily. Yes, they will come with higher prices but you don’t need to install a new line for them.

In comparison, scaling a PBX system is troublesome. Firstly, if you’re shifting your office to another location, you would need to install a new PBX system from scratch there. Adding and removing phone lines is a problem as well – you have to contact the provider who will install physical landline lines for every new user. This comes with hassle and cost.

Furthermore, adding new features is difficult too, because a technician will have to make the necessary changes physically on the PBX hardware. Plus don’t forget that doing all these changes would require you to pay for an experienced technician.

Security

PBX systems, relying on traditional telephony infrastructure, are generally considered more secure from cyber threats due to their closed network nature. However, they’re vulnerable to physical tampering and require physical access controls.

VoIP, on the other hand, operates over the internet, making it more susceptible to cyber threats like hacking and eavesdropping. However, many reliable VoIP providers mitigate these risks by employing security measures like encryption, security updates and firewalls when assigning VoIP numbers.

Reliability

PBX systems are more reliable generally because they are not dependent on the internet for functionality. However, they can face a breakdown during a power outage or disaster. For example, if a bolt of lightning damages the PSTN of your area, the landline connecting your PBX with the PSTN will stop functioning and you have to wait till the PSTN gets into running again.

VoIP is considered unreliable in comparison because it’s dependent on the internet connection. But bear in mind that you can easily have a backup internet in case your existing connection faces a breakdown. You don’t have to wait for the PSTN to be repaired, hence the downtime will be reduced by leaps and bounds.

Flexibility

VoIP is surely more flexible than a PBX system. It’s the same as comparing landlines with VoIP. Since PBX operates via landline thus your desk phones need to be connected to a physical spot. The agents can not take it anywhere else.

In the case of VoIP, the agents can move around with a hardware-based or software-based phone provided they have an internet connection. Also, they can use mobile VoIP devices to manage calls on the go (even in traffic jams or while working at home).

With remote working becoming popular with every passing year, PBX systems will face a major drawback because PBX phones can only be used inside the office.

Characteristic VoIP PBX

Technology

Uses internet.
Uses landline.

Cost

Lower upfront and running costs.
Higher infrastructure and running costs. Needs a dedicated technician for maintenance as well.

Scalability

Fast, easy and affordable (adding lines, phones or features).
Difficult and expensive.

Security

Faces internet-related risks. Requires reliable security measures.
No fear of cyber threats. Can face physical tampering.

Reliability

Can not function without the internet.
High reliability since it’s not internet-connected. But can face power outages.

Flexibility

High flexibility. Can manage calls from multiple devices and locations.
Limited to physical desk phones only.

Pros and cons of PBX

Pros:

What are the benefits of PBX?

  • They offer consistent and uninterrupted call quality as they’re not reliant on the internet.

  • PBX systems operate on a closed network, making them less vulnerable to cyber threats compared to VoIP systems.

  • They provide businesses with complete control over their telephony infrastructure. This allows for tailored configurations and customised features.

Cons:

What are the problems with PBX?

  • Traditional PBX relies on landlines. With the Big Switch Off 2025, landlines will be phased out thus you will have to move to digital signals whatsoever.

  • They require a significant upfront cost including PBX servers, switches and physical phone lines.

  • Expanding a PBX system can be complex and costly, as it often includes additional hardware and reconfiguration.

  • Traditional PBX lacks advanced features like video conferencing, call centre analytics and integration with CRM software and digital devices.

Pros and cons of VoIP

Pros:

The major benefits of VoIP are mentioned below.

  • VoIP systems reduce the costs associated with traditional phone lines comprehensively. They leverage existing internet connections and thus minimise the need for copper wires and expensive hardware. Long-distance calls are also much cheaper.

  • These systems are highly scalable, allowing businesses to easily remove and add lines and features. They also support remote work by enabling employees to connect from anywhere with their internet connection.

  • They offer a wide range of advanced features including video conferencing, voicemail-to-email and integration with other digital tools and software for better efficiency.

Cons:

Some drawbacks of VoIP?

  • It entirely depends on internet connectivity. If the connection is unstable, it can disrupt communication and lead to dropped calls or poor call quality.

  • A VoIP system is susceptible to cybersecurity threats such as hacking and denial-of-service (DoS) attacks.

PBX vs VoIP: Which is better for your business?

Different businesses and their unique goals require different communication systems. To determine whether PBX or VoIP is right for you, consider the following questions:

1. Do you have an in-house IT staff who can maintain the phone system?

If you have an experienced IT staff and you prefer to have complete control over your phone system, having an on-site PBX system is the way to go forward. It’s reliable, secure and provides superior call quality.

If you own a small business and can’t afford an IT team, a VoIP system is more suitable for you.

2. Do you often need to scale up or down your phone system?

If you have a business that has variable communication needs e.g. e-commerce or call centre, VoIP is much preferred because it is highly scalable and can respond to the needs of adding or removing phone lines much more efficiently.

3. What is the scope of the features you require?

If your business can do just fine with basic functionality like call forwarding, call recording and voicemail, a hosted PBX system is recommended. However, if you want advanced features like call analytics, voicemail-to-email, CRM integration and ring groups, you have to switch to a VoIP package.

4. Does your company own a stable internet connection?

If you have a stable internet connection in the range of 10-25 Mbps, you can take a high volume of calls on VoIP comfortably. But if your broadband faces hindrances or obstructions, switching to a PBX system may be a better option because it doesn’t require the internet to function.

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FAQs

You can expect to pay anywhere between £500- £1600 as upfront costs for PBX hardware and a running cost of £800/employee/month if you opt for a traditional PBX system and £25/month for a hosted PBX system.

There are 2 types of PBX mainly – hosted and on-premises. Hosted PBX is cloud-based, managed by a third-party provider, and accessed via the internet. It offers flexibility and scalability with minimal hardware investment. On-premises PBX is physically located at the organisation’s premises, providing greater control over hardware and security, but requiring higher upfront costs and maintenance.

VoIP provides a cost-effective, scalable and flexible solution to your business’s communication needs while a PBX is more reliable, secure and provides more control over the system. Depending on their respective advantages however, it’s safe to say that VoIP surpasses PBX.

Written by:

Isabella Robinson
Isabella Robinson
Isabella Robinson is a seasoned business content writer, leveraging several years of experience to craft impactful narratives that seamlessly blend business insights with engaging storytelling across diverse industries. Her expertise lies in delivering compelling content that resonates with audiences.

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