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Written by
Katy Ratican
4 Jul 2022
5 minutes

IP PBX: What it is and how it works

Everything a business owner needs to know about IP PBX including its benefits, disadvantages and alternatives
What is IP PBX?

IP PBX (Internet Protocol Private Branch Exchange) is a digital alternative to the traditional PBX. It has been making waves due to the many advantages it offers. If you’re considering upgrading your business phone system, here’s everything to know about IP PBX.

Over the last few years, you might have heard about businesses moving their operations to the cloud or systems migrating to the cloud. IP PBX is another example of that. It adds internet capability to the traditional PBX. That’s why it’s also called cloud PBX or VoIP (Voice over Internet Protocol) PBX.

What does an 'IP PBX phone system' mean?

IP PBX handles calls to and from a business, along with all internal calls within the business network. It switches calls between VoIP users and allows them to share multiple phone lines. Just like the traditional PBX, an IP PBX can also switch calls between traditional lines.

In other words, IP PBX adds internet capabilities to a traditional PBX. An IP PBX system can be in the form of either a software platform or a hardware device.

How does an IP PBX work?

To know how an IP PBX system works, it’s good to understand the role of a traditional PBX. A PBX connects users to a PSTN – or Public Switched Telephone Network – to provide communications for an internal network. By adding IP, calls can now also be made over an internet connection.

To connect callers over the internet, IP PBX converts analogue voice signals into digital packets. The calls are then directed to a VoIP provider who manages the initiation and termination of calls.

With IP PBX, users get all the features they would expect from a traditional PBX. You can set up call groups, call each other and check voicemail. When a call comes in, it’s authenticated and then presented to the PBX. Through the standard universal protocol of SIP or Session Initiation Protocol, users can also contact outside phone lines.

What are the benefits of switching to IP PBX?

A comparison of on-premise PBX and IP PBX will show you that an IP PBX system offers several advantages, especially for small businesses on a budget.

Lower costs

An IP PBX system doesn’t require physical hardware the way a legacy PBX does. VoIP providers also have substantially lower charges than their traditional counterparts. This is especially true if you make long-distance or international calls. If you have offices in multiple locations, by connecting them, you’ll be able to make free internal calls.

Greater reliability

One of the biggest advantages of migrating to the cloud is that you don’t have to worry about problems with the hardware. If your IP PBX were to go down, the VoIP provider can easily route calls somewhere else.

Superior mobility

As long as there is an internet connection, you’ll be able to make and receive phone calls. This makes it the right choice for businesses with remote teams.

Easier management

IP PBX comes with a dashboard that makes it easy to manage the system and customise it to your unique needs. This will save you both time and money.

What are the disadvantages of IP PBX?

Shifting to IP PBX does have some disadvantages, so business owners should consider these before making a decision.

Technical knowhow

For IP PBX, you would need technicians trained in the installation and maintenance of Linux operating systems. Not every small business will be able to keep them on their payroll or outsource it frequently.

Limited scalability

Another disadvantage is that you would need additional users to manage calls. If your team grows beyond your IP PBX capabilities, you’ll face serious challenges.

The difference between VoIP and PBX

These are the factors you should keep in mind when comparing VoIP and PBX for your business.

  • Costs. A VoIP system requires lower installation and maintenance costs when compared to PBX.

  • Call quality. PBX used to have an edge on call quality but VoIP has improved on this front.

  • Mobility. PBX limits you to a location, whereas VoIP is functional wherever you have an internet connection.

  • Reliability. VoIP systems are far more reliable since they can be routed to backup networks.

IP PBX alternative – Chalkboard, the second-line app for work

If you’re considering IP PBX, why not choose a second-line app that offers you much more without any of the security risks associated with VoIP? Rated among the best second number apps, Chalkboard is a communication tool built for small businesses.

By downloading Chalkboard, you immediately get a second number for work, which will help you separate your work and personal lives. Its superior mobility makes it the right solution for remote and hybrid teams.

Chalkboard allows you to organise your contacts and broadcast SMS to groups without having to manually type them out. The messaging feature will be your new platform for conversational marketing. Future updates will also allow teams to share phone numbers, which will significantly improve collaboration.

Download Chalkboard and start your free trial. It’s the integrated phone system that your small business needs.

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