What Is IP PBX?

An IP PBX is a business phone system that connects with phones (and other devices) over the internet.

IP stands for “internet protocol” and is a set of rules that governs how communication happens over a network connection.

PBX stands for “private branch exchange.” This is like a telephone switchboard that routes phone calls internally and externally.

An IP PBX requires on-site hardware, but instead of routing calls through the PSTN (Public Switched Telephone Network), it uses internet technology to handle call routing. This is in contrast to the other two types of PBX systems: the traditional, analog option and cloud-based PBX.

Traditional PBX systems involve on-site hardware and connect to the PSTN through copper wiring. Meanwhile, a cloud-based PBX involves no onsite hardware and operates entirely through a VoIP provider and their remote servers. An IP PBX system sits somewhere between the two — it uses the internet, but still requires a level of onsite hardware.

What Is the Importance of an IP PBX System?

An IP PBX system can handle all of your communication needs through a single central solution. You can easily fine-tune and tailor the system to meet your needs and align with new initiatives.

One main benefit is that IP PBX phone systems can still use most of the existing hardware you would have in place from the traditional option, but gain the benefits of internet telephony. For companies that already have an extensive network in place, this means it’s a simple switch, requiring minimal investment or change. Business can keep on as usual, just with perks like cheaper international calling (more on the benefits later).

How Does IP PBX Work?

Before the internet, businesses used on-premises private branch exchange networks that linked to the PSTN. These networks helped businesses save money and exercise better control over their communications. However, organizations were still at the mercy of local telephone network infrastructure and regional carriers.

An IP PBX helps you maintain control over your communications, but by using internet connections instead. There are three main things behind IP PBX systems: 

SIP (Session Initiation Protocol)

Session Initiation Protocol enables interoperability between different devices or stations. SIP initiates, maintains, and terminates every IP PBX phone call.

It’s also key to keeping legacy systems and analog phones — an elastic SIP trunk connects hardware devices to the VoIP provider, signaling that a call is being made.

Call Routing Through Internet Protocol (IP)

Once the connection is made via SIP, analog voice signals are converted into digital packets. These packets are transmitted via the internet, and reach the digital switchboard, which connects to a VoIP server.

Next, the call is directed to either a traditional public switched telephone network line or VoIP phone line.

Integration With VoIP Technology

IP PBX uses VoIP to transmit voice communications over the internet. Codecs are used to convert audible speech into digital packets. Once they reach the recipient, the packets are decoded back into voice. All of this happens near-instantaneously,  allowing for real-time communication.

IP PBX Features and Benefits (Plus Limitations)

What was once a luxury solution for cutting-edge organizations is now a must-have. With many countries shutting down their PSTN, internet telephony is the only option. Of course, it’s not just a necessity — it’s also an improvement. Let’s take a look at some of the main features and benefits (as well as a few limitations).

What Are the Key Features of IP PBX?

As mentioned above, IP PBX can either be on-premises or cloud-based. We’re going to focus on the more narrow definition here — the on-premises option — and save the alternative for later. With that in mind, here are some key features:

• Advanced call routing and forwarding. You have full control of how to route calls to extensions during and after business hours. Calls can be forwarded and routed according to availability, skill, or a set hierarchy. 

• Cheaper international/long-distance calls. Making calls over the internet means you’re not having to pay prices set by regional carriers. Call center PBX can make a huge difference to your costs, especially if you operate on a global scale.

• Call queue and hold options. It’s easy to set up specific music, recordings, or messages to play while a caller waits for the next available member of staff.

• Voicemail to email functionality. Not every IP PBX solution will include this, but for those that do, it allows users to receive audio files straight to their email address, meaning it’s easy to catch up when you’re out of the office.

• Conference calling. Multiple users (and external callers) can take part in a call at the same time, making it easy to collaborate and have group discussions between offices or with clients.

What Are the Benefits of IP PBX?

On-premises IP PBX can help you in a variety of ways, including:

• Cost efficiency. As mentioned, long distance calls are cheaper. You can also centralize your system, making internal calls between offices free! Additionally, if you already have PBX hardware in place, you can make use of it to reduce the initial investment required.

• Improved call quality. Using an internet connection allows for HD audio during calls.

• High level of control. Due to it being on-premises, your IT team will have complete control over the network — including over security.

• Be ready for PSTN switch-off. Depending on where your offices are based, it’s likely the PSTN is being phased out. Switching to an IP-based network means you’ll be able to maintain communication without issue.

What Are the Limitations of IP PBX?

We’ve been singing the praises of IP PBX, and now you’re ready to get on board. Don’t be too hasty. An IP PBX is worlds beyond a traditional business phone system, but that doesn’t mean it’s the only option to consider. Some solutions will have more challenges than others.

When evaluating whether an IP PBX is for you, consider the limitations of each option.

• Requires a technical skill set. Setting up a bespoke IP PBX on-site takes a wealth of technical expertise, both for the initial setup and to manage ongoing maintenance. If you don’t have these experts in-house already, hiring costs can increase the level of investment required.

• Unable to work remotely. Users need to be able to connect to their central IP PBX network to make calls. If they are out of the office, they won’t be able to reach your network with an on-premises IP PBX.

• Limited scalability. Due to the reliance on hardware, it can be a bit of a challenge to scale up. However, it’s still easier than traditional PBX options, as you don’t need to wire into the PSTN if you set up new offices.

• Fewer features than cloud alternatives. While it has more features than legacy systems, it’s lacking compared to other business communication solutions. Adding more advanced features to your IP PBX requires complex technical knowledge.

What Are the Different Types of IP PBX Systems?

So far, we’ve been focusing on on-premises IP PBX systems. But as mentioned earlier, there are other systems that are referred to as IP PBX, too.

Before searching for the right one for you, it’s vital to understand the types available.

On-Premises IP PBX

On-premises solutions are physically located in the building. They use existing network infrastructure, including your servers, wireless routers, and desk phones.

An onsite IP PBX gives you full control over security, governance, and other processes. However, it takes more effort to install, configure, and maintain. Connectivity for remote and hybrid team members requires jumping through several technical hoops.

Cloud-Based IP PBX

A different IP PBX approach is to connect to users in the cloud. There are different ways to implement cloud-based business communications. One method is to set up your own self-managed solution and consult with IT specialists like cloud architects to assist you in managing your PBX.

Alternatively, you can sign up with a vendor. A software-as-a-service (SaaS) provider hosts your cloud PBX from servers in redundant data centers.

Hybrid IP PBX Solutions

A hybrid IP PBX combines an on-premises PBX with VoIP features that you can find in the cloud. You manage the infrastructure of your PBX as usual. However, you connect with a VoIP provider that empowers your IP PBX with more advanced features and integrations.

How To Set Up an IP PBX System in 10 Steps

Setting up your IP PBX phone system takes research and planning, but it doesn’t need to be overwhelming. Follow these practical steps to get your upgraded telephone system up and running.

1. Assess Your Needs

The first place is to ask the right questions and find the answers. How big is your organization? How many users or extensions will you require?

What are the pain points of your current communication issues? Do you need features like video conferencing or the flexibility of mobile apps for hot desking and remote workers? Do you have compliance requirements or other needs that mean storing data onsite is a must?

Fill in the blanks and prioritize your organization's needs so that you can begin the IP PBX search.

2. Choose the Right IP PBX Solution

Now that you’ve got your must-haves in mind, it's time to look for a solution that ticks most — hopefully all — of the boxes. An overall big picture of your needs should direct you to on-premises, cloud-based, or hybrid IP PBX solutions. It’s crucial to make this initial decision to give your plan structure and narrow down your choices.

3. Select Hardware and Software

Find the right combination of hardware and software to build the PBX you envision. You may have existing equipment and tools that work with your new solution.

PBX hardware includes things like phones, servers, and routers, while software includes things like cloud computing services, VoIP softphones, and other business applications.

4. Prepare Your Network

The backbone of any IP business phone is the network you use to connect to it. Prepare your servers and other infrastructure to handle high volumes of traffic and data bandwidth. Have enough on-site routers to avoid latency and throttling that affects call quality.

Optimize your network firewall to allow secure, prioritized connections for outgoing and incoming VoIP protocols. These include SIP, RTP (Real-time Transport Protocol), and H.323 protocols.

5. Install the IP PBX Software

When your network is ready, you can install the IP PBX application of your choice. Work with the vendor to properly install, deploy, and configure your software. They can provide onboarding, guidance, and live support during the on-premises installation process.

6. Configure the IP PBX System

Configuring your IP PBX solution can be broken down into components. The steps will differ depending on if you’ve chosen an on-premises option or a virtual PBX, but key elements include:

• Creating and configuring extensions for each user or device. Assign unique extension numbers and configure user-specific settings

• Setting up VoIP or SIP trunks to connect to your Internet Telephony Service Provider (ITSP)

• Defining dial plans for internal and external call routing

• Enabling and customizing advanced features like voicemail, call forwarding, IVR (Interactive Voice Response), call recording, and conferencing to suit your needs

7. Set Up IP Phones

Connect IP phones and mobile softphones to the network to register them with the service. Once registered, admins and end-users will have access to various configuration options. Your provider will have given you any necessary information such as SIP account credentials. Users will need to do this for each new device connected to the IP PBX system.

8. Test the System

There’s no better way to find out if everything is set up correctly than to start making calls. Have new users try making calls from different locations. Can the caller clearly hear the person on the other end of the line and vice-versa?

Once call quality is satisfactory, encourage your team to test out core features such as call forwarding or video calls. Identify potential issues and troubleshoot with IT or your provider.

9. Train Employees

It’s best practice to train your team on how to use any new piece of technology. To an outside observer, placing an IP phone call looks no different than a traditional phone call. However, you also want your team to take advantage of features that increase productivity and make their lives easier.

For an in-house system, you’ll need to work with your IP PBX experts to create a training program that can be taught from the top down. Create a knowledge base and how-to videos that team members can access at any time. If you’ve used a hosted PBX, ask the customer success team for onboarding materials to help guide your training plans.

10. Monitor and Maintain

Once your IP PBX is running like a well-oiled machine, it will require regular maintenance. Hardware needs firmware updates. Software needs version upgrades. Both activities will serve to maintain network security and call performance. 

Use the service provider’s built-in analytics and reporting tools or your in-house solution to track and measure call quality — keep a particular eye on issues like packet loss, jitter, and latency. That way, if any issues do spring up, you should be able to tackle them immediately.

IP PBX vs. VoIP: What Is the Difference?

When looking for an IP PBX solution, there are plenty of technical terms that breed confusion. SIP, RTP, VoIP, and other technologies are all trying to do the same thing: make phone calls over the internet.

With that in mind, is there a difference between VoIP and IP PBX solutions? The short answer is yes! Let’s look at exactly how they differ and why VoIP can be a more efficient and up-to-date option.

VoIP Solutions

VoIP technology lets you make voice calls and send multimedia over the web. A VoIP solution is cloud-based, usually provided by third-parties, and tends to come with a lot of functionality. For instance, Vonage Business Communications offers over 40 features, including an AI virtual assistant, shared line appearance, and integration with tools like Salesforce, Microsoft Teams, and Slack.

VoIP solutions also suit remote work perfectly, with teams able to access the system from anywhere with an internet connection.

IP PBX Phone System

An IP PBX is best suited to organizations transitioning from legacy phone systems. It allows them to continue using their existing equipment and analog phones while also supporting IP telephony. In general, a PBX phone system is more complicated to set up and implement — and the on-site version doesn’t allow for remote work.

Four Reasons to Choose VoIP Over an IP PBX System

Why is VoIP often a better option than IP PBX systems, you might be wondering? Here are four of the main reasons:

1. You Need an Intuitive, Efficient System

Your organization wants a system that can be managed from a single admin dashboard. An intuitive interface means less technical prowess is needed to customize business communications. Your IT experts get more time to spend on complex problem-solving.

2. You Want a Scalable Solution for Future Growth

VoIP phone systems are highly scalable for growth and flexible to adapt to business needs. You can add lines as needed, without the need for any additional hardware. Plus, call flows and routing can be redesigned and optimized with changing demand, while specific features can be added when the time is right.

3. You Want To Unify Your Communication Channels

These days, you communicate with voice, video, team messaging, and email. It gets confusing when you have to juggle many applications at once. An VoIP system serves all of your communication channels in a simple, easy-to-use package.

4. You Need To Support Better Mobility for Your Team

A traditional PSTN system or on-site IP PBX option means every team member needs to be at a specific office location to make and receive calls. VoIP lets your team work from anywhere with an internet connection — making it perfect for businesses with a remote workforce.

IP PBX: The Ultimate, User-Friendly Call Center Solution for Your Business

The days of the traditional PBX are numbered. Sure, it lets you handle and direct phone calls, but what else does it do? A modern IP PBX system helps you communicate via the internet instead, as well as allowing for advanced call routing, conference calls, and cheaper international rates.

VoIP goes beyond that, with advanced features and integrations that improve team performance and enhance the customer journey. Schedule a conversation with the Vonage team today to learn more about the solutions we offer.