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In this guide, we will cover everything you need to know about IP PBX systems, from the basics of what they mean, how they work, their benefits, how they compare to VoIP and whether they might be the right choice for your business.

Quick links:

1. What does ‘PBX Phone System’ mean?

2. How does a PBX work?

3. What are the benefits of switching to IP PBX?

4. Difference between VoIP and PBX

5. Best choice for your business


What is a PBX phone system?

IP PBX stands for Internet Protocol Private Branch Exchange. A traditional PBX phone system connects telephone extensions to the Public Switched Telephone Network (PSTN) to provide internal communications for a business. With the addition of IP (Internet Protocol), it means that calls can also be established using an internet connection. A VoIP PBX phone system can therefore make and receive calls using the internet as well as maintaining analogue phones on-premises.

An IP PBX system can exist in two forms: either as a physical hardware device or as a software platform. 


How does a PBX system work?

There are two main types of PBX system: analogue and cloud-based.

An analogue Private Branch Exchange (PBX) system or landline uses the public switched telephone network (PSTN) and connects inbound and outbound calls using copper phone lines which are going to be switched off by December 2025.

A cloud PBX system converts analogue voice signals into digital. IP-based phone services use Session Initiation Protocol (SIP) trunking, which is the standard for VoIP phone systems and allows you to add new phone lines or modify your service as and when you need.


What are the benefits of switching to IP PBX?

There are several reasons why a business might choose to switch to a digital IP PBX from a traditional physical system, including a greater number of features, ease of use and lower costs. Below we have summarised the top 5:

1) Easier collaboration and more flexibility

In the world of modern business, there are now more ways to communicate with colleagues, clients and third parties than ever before. By using an IP PBX system, your business can make the most of advanced features including video and audio conferencing, call management features and call recording.

What’s more, you maintain all the collaboration tools you would expect from a phone system. Whether it’s call forwarding, call transfers or 3-way calling, the features you rely on remain.

The crucial difference for your business when opting to switch to an IP PBX is that your ability to stay connected remains, wherever you might be. Whether at the office or out and about making calls, you’ll never have to miss that important call again.

2) Easy management through an online portal

Carrying out your work and staying connected on the job will always take priority, but it’s also crucial that you can manage your system from wherever you are. With an IP PBX system, you can view, manage or edit your options, authorised users and any other aspect of the system from anywhere using an online portal.

3) Cost control

By switching to an IP PBX system, you dramatically reduce the need for any physical hardware or infrastructure, lowering significant costs to the business as a result.

What’s more, even if your business has several locations, it can still be managed from a single, central resource online, eliminating unnecessary costs.

4) Future-proof your business

For the reasons already mentioned, using an IP PBX system over a physical system helps you scale for future growth and enhance productivity. Because you can add new users and features easily as your business grows, your phone system will always grow with you. As a bonus, you only ever pay for what you need, helping to limit unnecessary expenses.

5) Peace of mind

Last but by no means least, with a digital IP PBX system you don’t need to worry about any unexpected shutdowns leaving you stuck in the mud. By using cloud-based systems that use multiple highly secure data centres, your phone system is completely resilient.

In the unlikely event that there is an issue with one system, your call is automatically and seamlessly switched to a back-up centre, so there is no disruption to your service.

To learn more about BT’s VoIP system offerings and experience these benefits first-hand, please visit: https://business.bt.com/products/business-phone-systems/voip/



When deciding whether to opt for a VoIP PBX system or a physical PBX system, there are several key comparisons that you should consider.

We have listed some of the most important here to help you make the best choice for your business.

  1. Up-front investment: IP PBX systems require very little investment up-front as it can be set up completely online, whereas a physical PBX system will bring with it a significant set-up cost.
  2. Running costs: IP PBX systems require very little running cost (typically requiring a subscription model) relative to physical PBX systems.
  3. Call quality: In recent years the call quality of digital IP PBX systems has been brought to a par with physical systems, although this can be dependent on the quality of connection.
  4. Scalability: The scalability of IP PBX systems is far superior to that of physical systems – this is because physical systems require more hardware to be added as organisations grow.
  5. Reliability: Digital IP PBX systems are more reliable and resilient than most physical systems as they don’t depend on avoiding hardware issues and can be switched to back-up networks if issues occur.
  6. Team mobility: With IP PBX systems, teams can stay connected anywhere with an internet connection, whereas physical systems are entirely reliant on location.
  7. International calling: Costs for international calls can often be extremely high when using regular phone company rates on physical systems. However, IP PBX systems bypass this issue as they use VoIP technology – which isn’t tied to any phone company – to place calls.
  8. Multimedia communications: IP PBX systems can handle a variety of methods and features of digital communication, from video and audio conferencing, to call recording and more. Physical PBX systems, on the other hand, can only make basic voice phone calls.
  9. Customisation: Modern IP PBX systems are more customisable than physical systems as they can be set up and managed entirely online – physical systems are more limited as they rely on hardware that may be outdated and inflexible.
  10. Advanced voicemail features: Both IP PBX systems and physical systems can offer voicemail features like voicemail to text or voicemail to email. However, with physical systems, you often need to pay more for additional hardware to implement new functionality.


What’s best for your business?

Which of the two PBX options is best for your business will always depend on its individual requirements. However, for an organisation looking to scale quickly and that wants to modernise its systems and connectivity, switching to a digital IP PBX system is a great choice.

One important factor will always be the size of your organisation – enterprise companies may have a greater need for scalability and flexibility, as workers might be distributed across different cities or even countries. SME businesses, on the other hand, might not need the same flexibility or scale when it comes to keeping their teams connected. 

Whatever your business and its priorities, it’s important to invest in a phone system that best fits your needs. With BT Business, you will benefit from local expertise and outstanding service, and our advisers can help you come to the right decision.

As the UK’s leading provider of VoIP phone systems, we pride ourselves on providing a personal touch and are committed to getting to know your business and the challenges you face.

Get in touch today for more information on the options available.