You’ve probably seen it in an old black-and-white film: a woman with a headset answering one call after another, neatly connecting the caller’s cable to the correct socket on a large switchboard to set up a conversation with the recipient.

The first phone systems were bulky and limited, requiring manual operation. Even years later, when the entire process of call forwarding was automated and switched to digital, it remained an expensive and complex undertaking.

PBX or PABX

Since this setup involved an exchange (not just of cables or connections but also of conversations or other data streams), it was called a “Branch Exchange” in English. The P in PBX stands for Private. In simple terms, it refers to a private phone system physically installed at a business.

While the term PBX quickly became standard in the international market, telecom operators in Europe added another letter, making it PABX, which stands for Private Automated Branch Exchange. Today, there’s no distinction between the two terms, as all PBX systems have been automated to some extent. Think of features like being forwarded to the correct department via a menu option or connecting directly to your account manager by entering your customer number.

Benefits of a PBX Phone System

A PBX system streamlines the entire communication process. In the past, every phone had to be connected to the nearest phone exchange via a “local loop,” resulting in a tangle of cables and a complex infrastructure—not to mention the financial impact of such an installation.

A Private Branch Exchange is a phone system installed at a customer’s location, allowing multiple numbers, extensions, and devices to be connected to a single system. Today, this no longer requires wired connections; instead, virtual lines (called “trunk lines”) are linked to the user’s connection. This eliminates the need for an intermediary to receive all calls and forward them to the correct internal device.

The main advantages of this setup are scalability and cost-effectiveness. While a physical system required significant financial investment, an internet connection is now sufficient to access a complete phone system. If your company expands and hires new employees, you don’t need additional connections; you can virtually configure them in the PBX. If you move or exchange offices, internal (and external) phone numbers move with you without relocating connections. Want to use toll-free numbers for customers or premium numbers for additional services? That’s possible with the existing PBX. Combine this with VoIP and a hosted telephony package, and the possibilities are endless.