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

Updated on Jan 14, 2022 by

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 tips on choosing the right business phone system will be clarified. We’ll start with the basics of PBX and VoIP.

PBX vs VoIP: Basic Definition

PBX (Private Branch Exchange) is a business phone system that connects office desk phones within the same network, allowing employees within a company to make calls to one another and to transfer calls for free. There are typically three types of PBX: traditional PBX, IP PBX, and cloud PBX. IP PBX phone systems can provide enterprise-level UC (Unified Communication) solutions with multi-level IVR (Interactive Voice Response) for businesses of different sizes.

Figure1: Traditional On-Site PBX

VoIP (Voice-over-Internet Protocol) is a technology used to transmit voice data via an Internet connection. VoIP phone systems take your voice, turn it into file data, compress those files, and then convert those files into packets of data. All of this happens in real-time, virtually instantaneous. These packets are sent over the Internet to a VoIP provider. Then the provider converts them back and sends them to the other phone. The sound quality of VoIP might be affected by the bandwidth and the device used, but now various different protocols and codecs are offered to ensure HD audio quality. VoIP phone systems can provide high-fidelity, reliable, secure, and scalable voice communications for small to large enterprises.

Figure 2: Cloud VoIP Phone System

PBX vs VoIP: What Are the Differences?

PBX vs VoIP: 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.

PBX vs VoIP: 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.

PBX vs VoIP: 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.

PBX vs VoIP: 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 worked 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.

PBX vs VoIP: 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.

PBX vs VoIP: 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.

Tips on Choosing the Right Business Phone System

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 in the near future?

If the answer is yes, a VoIP phone system will be suitable for your company. As mentioned above, PBX vs VoIP, it 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.

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