PBX vs VoIP Phone Systems: How to Choose the Right One?

 

PBX system and VoIP phone system are two main types of phone systems applied in business communications. PBX vs VoIP, which would you choose for a business phone system? In this post, several differences between these two business phone systems and factors to consider when choosing the right phone will be clarified. We’ll start with the basics of PBX and VoIP.

PBX vs VoIP: Basic Definition

PBX (Private Branch Exchange)

PBX is a kind of private phone network used by businesses. IP PBX phone systems can provide enterprise-level UC (Unified Communication) solutions with multi-level IVR (Interactive Voice Response) for businesses of different sizes.

• Employees of the organization can communicate both internally (with other employees) and externally using this kind of network.

• In addition to enabling call-making and receiving, a PBX network offers certain helpful functions not found on regular phones, like call transfers and an IVR menu.

• A business can install numerous phones that are all connected to the same network by employing a PBX.

Figure1: Traditional On-Site PBX

VoIP (Voice-over-Internet Protocol)

VoIP technology allows voice calls to be made via the internet as an alternative to traditional landlines. It transforms analog voice impulses into digital data packets that are sent to the recipient over the internet. The sound quality of VoIP might be affected by the bandwidth and the device used, but now various protocols and codecs are offered to ensure HD audio quality, Therefore, VoIP phone systems can provide high-fidelity, reliable, secure, and scalable voice communications for small to large enterprises.

This is a condensed explanation of how VoIP functions:

• Voice is converted into digital data packets by VoIP phones.

• The VoIP provider's data center receives data packets via the Internet.

• The packets are forwarded to the recipient's device by the provider.

• The data is converted back into voice by the recipient's device.

You can click here to learn more about VoIP: The Beginner's Guide to VoIP Phone System for Business

Figure 2: Cloud VoIP Phone System

Difference Between PBX and VOIP Systems

1. Upfront Investment

With VoIP phone systems, the main piece of hardware you need to invest in is IP phones. You can even use USB headsets with computers to cut upfront costs further. However, installing on-site PBX systems is a big project and requires a large upfront investment. Uninterruptible power supply, expensive routers, VoIP gateways, software, and other hardware are required.

2. Infrastructure

VoIP phone systems require Cat5 cabling or higher for each device to operate. Aside from cabling, the VoIP phone traffic will ride on your existing data network. Also, VoIP phones will need to be plugged into a data switch so you will need to have additional ports available, preferably PoE. Therefore, many factors need to be taken into account comprehensively before deploying VoIP system. PBX business phone systems can use Cat3 and also do not affect the data network.

3. Maintenance

The provider handles all the sophisticated hardware and software of VoIP systems. But with PBX, your IT team will be busy. Since you have to manage the system, updating and monitoring it. If any features stop working, your staff needs to troubleshoot and fix the issues.

4. Scalability

A VoIP business phone system can be scaled rapidly. As VoIP business phone systems are typically license-based, once the license is added the extension is created. With PBX working on cards, it’s not as simple. You have to add extra phone lines and install new hardware. For new offices, you need to install a completely new PBX system.

5. Compatibility

With VoIP systems, you can use IP phones or regular desk phones with an adapter. Agents can even use their own mobile devices or a softphone application on their computers. PBX vs VoIP, a traditional PBX can only work with phones that can work as proprietary telephones, so there are often compatibility issues.

6. Running Costs

VoIP providers typically follow a subscription model. While the running costs of on-site PBX depend on your setup, including software licenses, maintenance and service fees, update fees, and your phone bill. Business landline costs of the PBX systems alone normally can be up to 60% more expensive than that of VoIP phone systems.

Pros & Cons of PBX and VoIP

With a wide range of options available, it's essential to understand the benefits and drawbacks of each system to make an informed choice. If you need additional assistance, here’s a detailed summary of the advantages and disadvantages of both PBX and VoIP to help guide your decision-making process.

	VoIP	PBX
Pros	Setup is quick and easy	Call quality is more stable
	A wider range of functions	Integration with Traditional Phone Lines
	Greater flexibility and mobility	Full control over the system
	Lower operating and maintenance costs	More secure, less hacking risk
Cons	Depending on the network to run	Costs are typically much higher.
	More vulnerable to cyber attacks	Less expandable features

Factors to Consider When Choosing Between PBX and VoIP

How to choose between PBX vs VoIP system? The scale of the business, the overall network environment, the total expenses, and the operation & maintenance all need to be considered. Answer the following questions and make your wise choice before choosing the right business phone system.

1. How much is your budget for the business phone system?

PBX vs VoIP, the costs of setting up and running a VoIP phone system are much lower than that of a PBX system. As discussed above, onsite PBX installations are a costly capital undertaking. VoIP systems do away with this need for extra hardware since a broadband connection powers the service.

2. Is your company's network connection stable enough?

VoIP phone systems mostly used nowadays require a stable and fast internet connection. Therefore, a traditional PBX system could be better for business communications if the network connection of your company is unstable mostly.

3. Do you have in-house IT staff to maintain the business phone systems?

If you have IT staff with the required expertise and you prefer maximum control over your business phone system, an on-premise PBX system is a great choice. For small businesses or start-ups lacking IT resources, a VoIP phone system will save you a lot of time and effort as everything is in charge of the service provider.

4. Does your company have any significant staffing changes shortly?

If the answer is yes, a VoIP phone system will be suitable for your company. As mentioned above, VoIP is much easier to scale than a PBX system. Accordingly, VoIP phone systems are particularly beneficial for seasonal businesses with fluctuating communication needs or start-ups experiencing rapid growth.

Final Verdict: PBX vs VoIP

Both PBX and VoIP have their advantages and disadvantages. The PBX system is a familiar, secure, and high-quality telephone system. However, the initial setup and ongoing maintenance are expensive, and the PSTN network that traditional PBX systems rely on is being phased out worldwide. Compared to PBX, VoIP offers greater flexibility, scalability, and lower installation and operating costs. Although VoIP's performance heavily depends on Internet connection quality, most modern businesses have strong connections that can effectively support these systems. As enterprises prioritize flexibility, cost savings, and enhanced communication capabilities, VoIP is the best solution for today's dynamic business environment.

FAQ

Q1: What is the difference between VoIP and hosted PBX?

VoIP is a basic technology that allows voice communication and multimedia sessions over the Internet, and hosted PBX is a unique implementation of VoIP. A hosted PBX is a telephone system where the PBX hardware and software are hosted and managed by a third-party service provider, delivering communication services over the internet. Businesses don’t need to install, maintain, or update themselves, making it a convenient and scalable solution.

Q2: What is the difference between VoIP Gateway and PBX?

A VoIP gateway is a device that converts voice traffic from a traditional telephone network (PSTN) to a VoIP network, and vice versa. It acts as a bridge between analog/digital telephony systems and IP-based systems. A PBX is a private telephone network used within an organization that allows internal communication and manages incoming and outgoing calls to the outside world. The VoIP gateway serves as a bridge for integrating different telephony technologies, while the PBX focuses on providing and managing telephony services within an enterprise.

Q3: Do I need a PBX for VOIP?

No, you don't need a PBX to use VoIP. Simply subscribe to a VoIP service provider and use a softphone, mobile app, or dedicated VoIP phone to make calls directly over the Internet. While a PBX is not strictly necessary for using VoIP, it provides significant advantages for businesses with more complex communication needs. For personal use or small businesses, direct VoIP services and devices are typically sufficient. For larger organizations or those requiring advanced features, an IP PBX or hosted PBX solution is recommended.

Q4: Is PBX outdated?

Traditional PBX systems, although still utilized, are increasingly considered outdated compared to the advantages offered by VoIP and cloud-based solutions. Legacy PBX systems frequently lack flexibility, scalability, and advanced features essential for modern business needs, in addition to being more costly to maintain and upgrade. Consequently, many organizations are shifting towards VoIP and hosted PBX solutions to capitalize on enhanced functionality, reduced costs, and increased operational flexibility.