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A PBX (Private Branch Exchange) is a switchboard for telephone systems that makes connections among an internal telephone network and also connects them to the outside PSTN (Public Switched Telephone Network) via trunk or phone lines.
A PBX prevents the need for each individual user in an office to have a direct line to the public telephone network. This saves money by preventing internal calls from routing through the phone company and therefore incurring charges. Instead, the PBX facilitates all internal calls and manages a smaller number of lines and shares them with users making external calls.
IP (Internet Protocol) PBX systems are software-based exchange and extension managers for calls using the Internet Protocol — also known as VoIP (Voice over Internet Protocol) and Internet telephony. Since IP PBX systems are essentially software, advanced call features and treatments can be added to a system without incurring the high costs of a traditional PBX. This allows small and medium-sized businesses the same telephony capabilities as a large, expensive enterprise system.
A Hosted PBX is an IP-based telephony system that is Hosted by the service provider in a remote location (usually secure locations with redundancy to avoid service interruptions). Rather than the traditional PBX, the only equipment that is needed on-premise are the phones and any dedicated routing equipment. Since there is no need for expensive on-site equipment to purchase and maintain, the systems are much less expensive and easier to install, manage and scale. New features and users can also be added or removed without changing existing equipment.
This makes a hosted PBX the best telephony solution for both small and medium-sized businesses. Larger businesses that have many remote users or that operate in dynamic environments can also benefit from a Hosted PBX.
The benefits of a Hosted PBX over a premise-based enterprise PBX system are similar to the benefits of a VoIP system in general. Aside from the significant cost-savings and infrastructural benefits, many Hosted PBX systems provide enhanced features and services that are only available on a hosted system.