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Xpander VoIP Blog

What is a Hosted PBX?

Posted September 26, 2011

In order to understand what a hosted PBX is, one must first understand what a PBX is. The term PBX is just an abbreviation for Private Branch Exchange. The job of a PBX is to literally tie telephones together into a unified and organized system. For example, if a company has 10 total phones scattered across offices, conference rooms, hallways, and break rooms, the PBX will assign each phone an extension number. An extension number is nothing but an internal phone number for private use. For example, the phone on the CEO's desk is extension 101, the phone in the break room is extension 110, and the phone in the controller's office is extension 105. Now that the PBX is providing these organized extension numbers, it is possible for the CEO to call the controller directly and privately simply by dialing 105.

Now that we've established what the PBX does internally, lets look at what it does externally. Externally, the PBX is connected to the rest of the world via telephone lines. For example, if you have ever heard of dialing “9” before making a call, this means that you are now leaving the PBX to make your call. As opposed to dialing “105” to reach the controller, you now want to dial 1800-Flowers to order some flowers. This means the PBX must be connected to at least one external telephone line for the call to make its way to 1800-Flowers. In the example above, by dialing 9, you are manually telling the PBX to access one of these external telephone lines so that you can successfully be connected to 1800-Flowers. This means that the PBX must be physically connected to some sort of phone carrier service. If the PBX is not connected to a phone service, or all telephone lines are already in use by other people, then you will only be able to dial from extension to extension, internally. Lets dig deeper into the example of an office with 10 telephones. Since there will never be a moment in time where all 10 telephones are simultaneously connected to external phone numbers such as 1800-Flowers, the PBX does not actually need 10 external telephone lines connected to it. Depending on the type of business, 6 telephone lines would most likely be more than enough to satisfy external calling at all times, thus the PBX allows for telephones to share a pool of external lines in a very efficient manner.

In addition to internal and external number dialing, the PBX also must provide features. The most common features include auto-attendant, hold, transfer, conference, park, and voicemail. Since the PBX is already responsible for internal and external dialing, the features are applied to both types of calls. For example, if the CEO on extension 101 is talking to the controller at extension 105, they could use the conference feature to conference in a sales person sitting at extension 103. This is an example of an internal conference, where no external telephone lines are being used and the 3 parties are all talking within the system. The PBX could just as easily conference in someone externally. For example lets take the same scenario where the CEO and the controller are talking internally, except this time the sales person is out in the field on their cell phone, not at their desk. In this case they could also use the conference feature to conference in the sales person who is external to the system because the PBX handles both internal and external number dialing. The point is, that the PBX features can be applied to internal calls, external calls, or both and this is the real power of the PBX.

Now that we have answered the question “what is a PBX?”, the hard part's over. We are still however left with having to answer the original question of “what is a hosted PBX?”. You see, the PBX itself is a physical unit, much like a desktop computer. The PBX sits in a physical box that is plugged into a power supply and is also plugged into some telephone lines. Traditionally, this PBX box is purchased by a business, and installed in an equipment closet or small room where it runs off the local power and office wiring. So for example, in this case, if your office experienced a loss in power due to a storm, the PBX sitting in your equipment room would shut down and all telephone communication would be dead. The term hosted simply means that the PBX box is not actually installed in a small room or closet in your office, but rather hosted for you in a super-facility known as a data center. This means that even if your office experienced a total loss in power due to a storm, your PBX would still be able to route calls because it is sitting safe and sound in the super-facility or data center. You may be wondering, if the PBX is sitting in some remote location, how can my office use it? Well the answer is literally right in front of you. The same way you are able to read this blog, search Google, and chat on AIM or Skype, is the same way you will use your hosted PBX, via the wide area network known by all as “the internet”. This will require 2 things. First, it will require an internet connection. If you are open for business, chances are you've had highspeed internet from day 1. Second, it will require a special type of phone called an “IP phone.” IP phones are like little computers designed to do one thing, behave and act like a phone. The IP phones will boot up and connect to the internet via your existing internet connection. They will then instantly and automatically connect to your hosted PBX which is off site in the super-facility we now know is called a data center. So continuing with the original example, when the CEO plugs in his IP phone, it will boot up as extension 101. When the controller boots up her IP phone, it will boot up as extension 105. The phones are instantly ready to make and receive calls with no other installation or steps required. Based on this, you can see that the geographical location of the phone does not matter. As long as there is internet, the phone will still come up as the extension it's supposed to be. So for example, if your office was affected by a power outage, you could bring your IP phone home (assuming your home was not affected by the same power outage) and you could use your home internet connection to boot up your phone and continue using your same office extension without missing a beat. The hosted PBX is central and can be connected to from any internet connection in the world. The diagram below demonstrates the basic structure of a hosted PBX.

There are near endless discussions to be had on comparing individual features, costs, pros, and cons between hosted and non-hosted PBX systems; however, this article will stop right here as we hope we have successfully answered the question: what is a hosted PBX? Please contact us with any questions or comments. We'd love to hear them.

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