PBX (Private Branch eXchange ) is a private telephone network typically used by a company or an organization. The PBX can switch or route calls so that users can communicate with each other inside the network by extension dialing. Phones also connect externally to traditional telephone companies (PSTN) or over the Internet using VoIP (Voice over Internet Protocol ).
Companies operate their PBX switch to assign extensions to user's phones so that they can be utilized for calls inside the network.
PBX phone switches, can be digital, analog or IP. Many are hybrids, allowing several different types of connections.
Calls can also go directly to that extension by calling the companies' main number from outside and then the extension. Companies may also obtain additional telephone numbers and/or a group of DID (Direct Inward Dialing ) numbers. Groups of DIDs are offered by telephone companies to their customers as apart of their service package. When calls are placed to a DID it is routed directly to a particular phone, person or other endpoint inside the organization.
An older PBX cabinet (KSU).
PBXs can use analog or digital, both of which use traditional telephone wiring and/or Ethernet for IP or VoIP calls. IP-PBXs can employ a combination of these technologies connecting to traditional PTSN services and VoIP providers. Some PBX switches use only VoIP and connect only through an Internet connection typically using SIP (Session Initiation Protocol). These IP-PBXs are frequently referred to as a VoIP appliance. They utlize services from a SIP provider who then sends calls to and from the customer's VoIP IP PBX (switch).
A cloud PBX is where the PBX switch resides off premise out in the cloud which can be hundreds of miles away which is also known as hosted VoIP. The switch then handles all the functions and features of the business phone system just like a traditional IP-PBX. The IP telephones connect up to the hosted PBX which then routes calls both in and out of the organization. The switch also manages all the features, like call forwarding, voicemail, auto-attendant, etc. Two users can be at separate physical locations, but call each other by an extension number exactly like in an office. More: What is a Cloud PBX