Standard, On-Site PBX

oldPBXswitchboardA PBX, or Private Branch Exchange System, serves a private network of telephones in an office and acts as the gateway from a company to the outside world. A traditional PBX is a physical, on-site switching system that performs these central functions and hooks up to the public switched telephone system (PSTN), which connects the world’s telephone lines, cellular and satellite communications networks, and others, allowing us to hear a voice on the other end of the line.

A PBX system routes incoming calls to the appropriate extension in an office, and to share phone lines between extensions. Many functions can be added to better suit a business, however, with the physical limitations of this technology every change or enhancement requires massive reconfigurations preformed by a trained telephone technician.

The range of features offered by a PBX system varies and, due to the high level of maintenance required, is typically hampered by the price of the equipment and service required to introduce these features. Primary functions of PBX phones include:

  • A single business number that gives access to all company employees and departments
  • A menu of options for directing the call, such as connecting to a specific extension or to a department
  • A directory of employee extensions accessible by inputting digits corresponding to employee first or last names
  • Evenly distributed calls to a department among available employees through Automatic Call Distribution (ACD) queues
  • The ability to place callers on hold when they are waiting for an available department employee
  • Music or custom messages whenever callers are waiting on hold
  • Voice messages for any employee extension, department, or for the company in general
  • Transfer of calls between extensions
  • Conferencing multiple incoming calls with employee extensions
  • Detailed records of incoming and outgoing calls

Not all equipment vendors offer these features and furthermore, not every customer will need them. Possibly the most valuable feature to include for many businesses, however, are real Automatic Call Distribution (ACD) queues. Consequently, this is also one of the most challenging functions for physical switches to provide and, as such, ACD queues are typically unavailable or cost prohibitive from standard PBX providers


Physical PBX phone systems are mature technologies that offer many benefits for the right type of application. Businesses that can reliably predict their needs can usually find a fixed, cost-effective system, provided that there will not be a need to scale-up the functionality of the system.



Costs are problematic with standard PBX systems in two areas. The up-front cost for getting an advanced system up and running can be very high, running upwards of $2,000 per seat (user), including the cost of the equipment, installation, and wiring. At the lower end of the spectrum, the equipment offers limited features and usually limited scalability but both still lack most sophisticated features without special, and costly, configurations. An additional, often overlooked expense goes towards ongoing maintenance and support. As PBX equipment continues to add functionality, there is an increasing need for highly trained support staff to maintain the hardware and software, roll out system upgrades, and manage system use. Ongoing support and maintenance costs typically run at about 1% of the cost of the equipment each month. For example, a $20,000 PBX switch, which would provide service to 10 to 40 employees, depending on system features, would typically cost an additional $200 per month for maintenance.


Most PBX hardware is limited in its ability to add both internal and external lines and to support more users or features. Low-end systems are especially difficult in this regard, often forcing small businesses to overbuy in order to have enough capacity for the business they hope to grow into. While many features can be purchased, they often cannot be added to an existing system, forcing businesses to pay for new systems in order to get relatively uncomplicated feature upgrades.


PBX equipment was originally designed around the idea that employees would be centrally located inside an office. Today’s mobile environment is incompatible with this model. Basic PBX architecture is challenged to send calls out of its home network to a different phone.

For more information on the overall comparison between hosted and on-site PBX systems, visit the PBX Cost Comparisons Table.

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