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What are business telephone systems?

Updated on November 21, 2012

Business telephone systems

Business phone systems have become increasingly common across the world. These phones are very different from the ones you use in the home (unless perhaps you work from home). The phones are often part of a telephone exchange that employs a number of protocols to provide internal and external communications.

Businesses have special communication needs that can only be addressed by a dedicated phone system. There are many types of business phone systems with some offering basic connectivity and others running as a fully-fledged private exchange.

This lens will guide you through the various business telephone systems available, so that you can work out what system will suit your business best. Whether you're starting up a new business or looking to update the technology in your current business, the information here should hopefully help you to make an informed decision.

A brief history of business telephone systems

Putting the customer first

The need for a dedicated phone system for businesses arose after the Second World War. As the phone network expanded in the developed world, home-owners started getting connections and wanted to contact retailers and other companies through their phones.

Companies were happy to oblige where they provided them with a single number to call to. As businesses expanded, companies had to subscribe to multiple connections at a single location. This resulted in the development of phone exchanges where companies were able to streamline their communication departments. Customers also had the chance to connect to the right person by simply mentioning the extension or seeking operator's assistance. The business telephone system was born.

Telephone exchanges became commonplace within a few years of invention. New features were added and it became possible for smaller companies to run an exchange. The greatest benefit was that of procuring a unique identity for a business. It was considered elating to have a dedicated exchange for any business, leaving a positive impact on the current and potential customers.

The immense popularity of telephone exchanges resulted in the development of new technologies. Older phone extensions took minutes to connect to any number and businesses had to employ a number of operators and technical staff to run the operations. Manual switching reigned supreme during these times, when every caller had to wait for long periods of time before getting connected to the desired number. It took only a few years before the entire process was turned automatic.

Modern business phone system exchanges mainly come in three main varieties , which you can read more about below:

Private Business Exchanges

PBX Systems

A Private Business Exchange or PBX is the standard phone system used in companies, though it is facing stiff competition from new technologies. A PBX exchange, which relies on automatic switching, can now be found at businesses, hospitals and government organisations around the world.

Modern PBX systems offer much more than telephonic connectivity and streamlining of extensions. They are used for transmission of voice and data and act as the main telecommunication gateway for any organisation.

PBX systems tend to be easier to install than other phone systems, although again this may change with new technology and investments in fibre optic phone lines. Businesses interested in deploying the system need to subscribe to a few trunk call connections from the regular PSTN networks. The PBX handles everything from phone calls to fax machines and modems. It is actually the PABX system as the operations are run automatically.

EPABX systems have also found their way into the business community that offers a crisper voice quality and greater communication options such as conferencing, group calls, call baring, barge-in and other features.

The only problem with PBX systems is that they are relatively costlier to operate. Although most of the processes are done automatically, operators are still needed and the system does not always perform at its optimum best. The use of standard PSTN connections is to blame, as, in comparison to more recent phone systems, it no longer offers the optimum speed and excellence that is asked by businesses.

Costs alone can cause a major increase in phone bills as the system charges on a per-minute basis, or as per the tariff rates of the local jurisdictions. There are, however, still some advantages of PBX systems: it offers simple installation and operation given the lack of many sophisticated features.

VOIP PBX Systems

An updated, hybrid system

This is a hybrid system where a Voice-over Internet Protocol service is incorporated into the system. The system relies on packet switching, where the capabilities of the internet have been harnessed to ensure a speedier and flawless communication of voice and data. VOIP hybrid exchanges use a single network for voice and data as compared to a conventional PBX system that relies on separate communication channels.

The best aspect of a VOIP PBX is that it can be used to streamline voice and data in a seamless manner. Users can switch between voice and data and there is no impact on the voice quality or deterioration in internet bandwidth. As a result, a large number of companies have started using VOIP PBX systems, as they offer a cheaper and effective means of communication. A standard PBX is expensive as it uses separate networks for voice and data, thus causing a major increase in phone bills.

A VOIP PBX uses a single channel and sifts the data based on its origins that reduces costs as the Internet connection takes a significant load while the rest is diverted to the PSTN lines.

VOIP Systems

Technology for the modern world

An alternative to standard business phone systems is a VOIP connection. Businesses around the world are turning to VOIP as the cheapest and most effective way of connecting with their clients and customers. Unlike standard PBX or hybrid systems, VOIP systems do not rely on a PSTN connection. The system uses the internet as the sole network for every type of data. Given the lack of a PSTN connection, businesses no longer have to pay phone bills. This is a very attractive prospect as businesses are looking to streamline costs and reduce overheads.

VOIP offers the cheapest method of communication as businesses only have to pay for the internet charges. A large number of companies operate solely in VOIP, where they offer long-distance calls at extremely low prices. The best thing about VOIP is that long-distance calls are not charged on a per minute basis. Businesses have to pay daily, weekly or monthly flat tariffs, irrespective of the duration for which the international calling facility has been used.

VOIP has also made it easier to use audio and video conferencing facilities, use group-call features and transfer data at high speeds. VOIP connections are also more secure where businesses can deploy a number of additional security protocols to ward off data thefts and break-ins.

PABX is still widely used in the business community, but VOIP is slowly taking over.

Are smartphones the future of the office?

I found this article which reports on predictions that, within five years, office landlines will have disappeared, being replaced completely by smartphones. An interesting read, especially for business owners planning for the future.

Landlines, or smartphones? - Which do you think will prevail?

With the above article stating the prediction that office landlines will disappear within five years, I'm curious as to what everyone thinks. Are we all going to be completely reliant on smartphones? Will we have to buy our own, or will companies provide every employee with their own smartphone? Let us know your thoughts here!

Will office landlines disappear within five years?

Poll time

Is this the future of business communication?
Is this the future of business communication?

What do you think is the most efficient phone system for businesses?

See results

What do you think of these business telephone systems? What would you recommend for a new business? Let us know here!

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