These are the Different Types of Business Phone Systems
identify three distinctive variations of business phone systems for
you to consider when installing business
telephones. They are Key and Digital PBX Systems, IP-PBX Systems and cloud
based PBX solutions. Comparing business phone systems starts with
understanding these three principal types, KSU, PBX and VoIP.
Comparing business phone systems starts with
understanding the three principal types; KSU, PBX and VoIP.
are uncomplicated multi-line on-premise digital business telephone systems
used by smaller organizations. They have been in use for decades and employ proprietary technology
and match with specific proprietary digital desk phones.
are phone systems with the PBX server residing on-premise
incorporating digital or IP (Internet
Protocol) phones. They regularly use proprietary phones which
allow users to talk to each other inside a private telephone
Cloud based PBXs deliver communications over
the Internet using VoIP (Voice
over Internet Protocol). A cloud PBX provider "hosts" the server and
software at their facilities rather than on the user's premise. They
regularly accept several distinct manufacturers of IP phones.
About Key Systems and Digital PBXs
These digital systems are business on-prem phone systems that provide inbound extensions
and allow users to access more
than one telephone line from several telephones. A particular line can be
placed on hold to answer or initiate calls on other lines.
They regularly incorporate an attendant, voicemail and call routing features.
Calls can go through the automated attendant or
ring through directly to an employee's extension by using DIDs (Direct
Inward Dialing). Phone service is routinely delivered by a local phone
company either as ordinary business CO (Central
lines or a PRI (Private
When a customer calls the business number it routes to the phone KSU or
PBX which then handles the call. If the CO line is active, the phone company
rolls the call to the subsequent line sequentially. Many small businesses have
three, four or eight lines. Larger companies more often use a PRI
circuit which delivers 23 concurrent transmissions of voice, data or
video traffic between the telephone provider and the business.
Companies regularly choose digital phone systems which accept
wiring rather than having to pull new Ethernet cables.
An automated attendant transfers incoming calls to particular
phones or departments; a must have feature for any business.
On some digital telephone
systems, each incoming phone line appears on its own separate button. A key
phone system telephone connects manually to each phone line. Line
appearances allow employees to recognize
who is on a call and who is not. Many employees have grown accustom to this
feature, especially in very small business environments and can be reluctant
to give it up.
Some digital phone systems provide IP
technology. The Avaya IP Office can be digital, IP or a combination
of both. Hybrid installations represent a cost-effective solution.
Cabling frequently figures in the decision process
when choosing a phone system, as digital phones can
connect to existing traditional phone wiring. IP phones require an
on-prem phone systems connect to CO lines (traditional business lines) or a PRI from the local telephone
company. This enables
business owners to remain with their current telephone service if
About IP-PBX Business Phone Systems
An IP-PBX business phone system is a PBX that uses IP
to deliver voice or video over a data network. They can interoperate with the
Public Switched Telephone Network (PSTN) or through VoIP (Voice over Internet
Protocol) or a combination of the two. An IP-PBX remains a
substantially more advanced system than earlier PBXs incorporating more recent technology
with noteworthy advanced feature-sets.
Advantages and Disadvantages of On-premise Phone Systems
- Low to moderate cost. With numerous
manufacturers specific systems can be acquired in various price ranges.
many adequate refurbished systems are available for purchase from
- Very durable and long lasting. Once installed
on-premise phone systems regularly operate for
years without the need for upkeep.
- Easy to identify what line is being used (who's on the phone).
Some phones include LEDs that show if that line (or extension) is in use.
- The ability to connect phones to actual phone outlets through
existing phone wiring. Using existing telephone wiring to
locations where no Ethernet cable exists keeps down costs.
- Some systems can incorporate a PRI interface
that choose to remain with a PRI.
- Often older legacy technology that can be costly to include
or integrate with some business applications.
- Key systems are limited in the number of lines and telephones,
therefore remain as a choice only for very small businesses.
- Proprietary; require specific phones and equipment.
- A telecom technician is required to complete a cross connect for phone moves
and make programming changes. (Phone technician
service on site.)
- Even though some digital systems allow for the addition of IP
phones, auxiliary equipment and licensing can increase costs.
- Setting up remote phones are not routinely straightforward.
IP-PBXs Can offer the Most Recent technology.
New IP-PBXs incorporate the most recent innovative technology including
multi-channel communications. For instance, Mitel, Cisco and Avaya deliver
feature rich enterprise solutions worldwide. Likewise, there are several
leading on-premise PBX manufacturers providing outstanding systems for
small businesses, like NEC, Allworx and Sangoma, to name a few.
- Most recent technology using IP. Some IP-PBXs support both
digital and IP and are remarkably effective in hybrid environments.
- Total in-house control of your phone system.
- Advanced feature sets with capabilities to integrate most
- One network, all data. Or can be divided into an all IP voice
and data network.
- Easy phone moves for IP phones.* (No cross
connects, just like with a PC, move the phone from one data
connection to another, connect it and everything is the same.)
- Save maintenance costs (adds, *moves, changes).
- VoIP capable. SIP trunks can be setup for lower cost phone calls.
more costly than other types of digital PBX systems.* Initial costs
are greater than implementing a hosted solution, however over time
lower in cost.
- Some proprietary systems require particular hardware and licensing fees.*
- Upgrades and maintenance requires
knowledgeable admin people or vendor specific technicians which can
- Proper data cabling must be in place.
- Several on-premise
manufacturers have periodically discontinued products. These changes
have forced companies to replace or upgrade systems for lack
of support and upgrades.
On premise systems are often more effective
for the following types of businesses:
- Retail stores that
require between three and eight phone lines. Businesses like parts
stores, manufacturing facilities, industrial, warehouses, etc.
- Facilities which are part office and warehouse or part office and
manufacturing. Installations which require the use of regular phone wiring.
Businesses that want to remain with an existing PRI circuit.
- Hotels and motels which typically possess a considerable number of
phones which are not in constant use and where updating the cabling
infrastructure would be costly.
*NOTE: Some Asterisk based VoIP appliances remain very reasonable in cost.
They will operate with a variety of IP phones and frequently incorporate
features without any add-on licensing fees. These systems
can be self-managed by data savvy personnel, however are more difficult
than hosted VoIP platforms. Several manufacturers include support for
customers who have purchased their appliance.
Advantages and Disadvantages of Hosted VoIP or a cloud based PBX
IP phones and a computer can share the same Ethernet cable.
A cloud based PBX service or hosted VoIP
represents a leading
choice for a business communications platform. A few notable
providers are RingCentral, Nextiva and Ooma to name just a few. They
each present a selection of plans that incorporate a set package of features
to accommodate most business needs. Cloud based providers
communications that integrate video, chat and voice. Smart phones
connect right up, so
employees can remain totally connected from anywhere.
there are a limited number of specialized virtual phone services
tailored to provide entrepreneurs effective business communications to add to
their existing smart phone service. These services, like Grasshopper
and MightyCall are uniquely designed platforms for decidedly small or solo companies.
- Advanced multi-channel technology where providers regularly enhance their
platforms to remain
- Easy for at home and remote employees to connect
and communicate exactly like at
- Tools for collaboration and customer management.
Many systems incorporate smart phone apps for remote connectivity.
- Advanced secure multi-channel features with integration with
separate business apps.
- Much lower initial costs. No requirement to continually budget for
updates or innovative technology as the provider includes new features when
developed as part of their service.
- Fast, simple installation that can be done quite quickly.
Ability to self-manage and administer the system. Providers include support.
Easy to setup at-home workers.
- Lower phone call costs.
- Equipment and software maintenance, upgrades and system administration is
performed by the provider.
- On-going monthly costs which are charged by the phone or seat. Phones
which may not see much use still get charged the monthly fee. (This can be a
significant factor within the hospitality industry.)
- VoIP requires a stable Internet service.
- Some credit card machines, elevator phones and alarm systems may call
a traditional analog line from a traditional phone company.
- Some advanced features require a more expensive plan. However, several
hosted VoIP providers offer specific plans which include a multitude of
sophisticated features for one set price. Some providers require a
yearly commitment for their best pricing.
- Larger companies with more than 50 employees/phones often require
additional more-sophisticated in-house network equipment and administration.
VoIP excels for these businesses:
- Any business with multiple locations. Global companies that call internationally. Businesses that
regularly have considerable numbers of inbound or outbound calls.
- Any new office or business that use remote or at home
employees. Businesses that want integrated video and chat.
Companies that want built-in CRM capabilities.
- Call centers that do not retain capable IT staff that can
setup and manage an in-house solution.
- On the go entrepreneurs and sales people.
Small retail businesses frequently find a modest on-premise phone
system provides the appropriate mix of affordability and features.
Some professional offices depending on their business model have
discovered cloud based providers offer flexible
multi-channel communications with features that boost efficiencies.
currently recognize the need to provide for work from home employees,
which cloud based providers and VoIP capable PBX phone
systems make possible. Hosted solutions especially exceed in making it
simple to connect from anywhere without complexity.
There are many components to consider when
creating efficient dispersed work environments. Hosted PBX providers
have crafted efficient integrated communication platforms with security,
reliability and affordability. Cloud based PBX services provide
companies distinct communication advantages in that they are
straightforward to setup
and manage. Many platforms incorporate smart phone apps that employees can use while
Large organizations frequently employ an
IT capable staff to manage substantial IP-PBXs like Cisco, Mitel and Avaya in an
extensive network. Small businesses do not possess
these resources, but can gain the same advantages of large-scale
enterprise communications using cloud based VoIP providers.
This article was updated on October 4, 2021. About the
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