Is PBX better than VoIP?

Figuring out the best phone system for your business can be a challenge, especially considering the countless terms you’re bound to encounter. Two common terms you often see are PBX and VoIP, and it’s easy to assume they’re competing technologies. After all, both acronyms describe certain types of phone systems. But is PBX better than VoIP?

The truth is that there’s no easy way to answer that question. Why? Because the two aren’t meant to be compared.

In this guide, we’ll clear up the confusion around the PBX vs. VoIP debate by breaking down exactly what a PBX is, what VoIP is and how the two are connected. Let’s get started.

What is a PBX?

A PBX, or Private Branch Exchange, refers to a type of business phone system that has its own private network within an organization. With a PBX business phone system, employees can make internal calls to one another, as well as receive or transfer external calls from those outside the organization.

How does it work? Instead of giving every employee their own phone line and number, PBX phone systems allow multiple internal users to share a limited number of external lines. These lines are split into extensions, which are then assigned to individual employees or offices.

This setup makes it possible for an organization’s employees to connect to each other within the private network. At the same time, when outside calls come in, the system can route them to the correct extension. So, even though everyone shares the same company phone number, callers can still reach the right person directly.

As you can probably tell, most major businesses have what is considered a PBX. Because of its dominance in the market, the term “PBX” is often used interchangeably with “phone system.” Additionally, “PBX” can also be used to refer to the hardware, equipment or software that manages all of the inbound and outbound calls and makes a PBX system possible.

Traditional PBX business phone systems vs. hosted PBX

Over the years, the PBX business phone system has evolved into two main types: traditional PBX and hosted PBX. While both serve the same core function, they differ significantly in how they’re set up, maintained and delivered.

A traditional PBX system—also known as an on-premise PBX or legacy PBX system—relies on the Public Switched Telephone Network (PSTN) for connectivity and requires physical PBX hardware to be installed at your business location. Because they’re installed on-site, businesses often have complete ownership of the system and are responsible for operating, maintaining and upgrading the phone system.

A hosted PBX, on the other hand, is managed and maintained off-site by a third-party phone service provider. Hosted telephone systems require minimal on-site infrastructure since the PBX itself is hosted off-site in the cloud. That’s why it’s also referred to as a cloud PBX phone system.

With this setup, all call routing, voicemail and administrative features are handled remotely over the internet. Businesses can access and manage their phone system online, while the provider takes care of back-end updates, security and ongoing maintenance.

What is VoIP?

VoIP stands for Voice over Internet Protocol and is the modern alternative to analog phone systems. Rather than relying on the PSTN and its analog, copper-wire lines, VoIP phone systems use the internet to transmit calls.

Also referred to as IP telephony, VoIP has become one of the most popular phone service options. Whether it’s being delivered as part of a residential home phone system or a small business’s PBX, VoIP services offer many benefits, such as greater call quality and advanced features.

Here’s how it works: VoIP solutions convert audio into small packets of digital data that are transmitted over the internet, then reassembled on the receiving end as audible sound. Because this process uses your internet connection rather than analog lines, VoIP can deliver higher call quality and work across longer distances without signal issues.

Another benefit is flexibility. VoIP service is available anywhere with an internet connection, meaning you’re not restricted by the location of your physical phone lines. As long as you have an internet connection and an IP-enabled device, which ranges from desk phones and smartphones to tablets and computers, you can make and take VoIP calls.

That’s a big part of why hosted VoIP has taken off. It gives businesses all the phone features they need without the hassle of on-site equipment, making it easy for teams to stay connected, no matter where they are.

Can a traditional PBX use VoIP?

When it comes to business VoIP systems, VoIP technology is most frequently paired with hosted telephone systems. However, this doesn’t mean that businesses with traditional, on-premise PBXs can’t take advantage of internet-based voice communications.

SIP trunking, which is offered by most VoIP providers, is a service that virtually connects your analog PBX to the internet. With SIP trunking, businesses can continue using their existing PBX hardware while gaining access to VoIP advantages like lower calling costs and improved call quality. It’s an effective way to modernize a legacy system without a complete overhaul.

So, is PBX better than VoIP?

Now that we’ve defined both technologies, let’s return to the original VoIP vs. PBX question.

By this point, it should be clear that neither is better than the other. PBX and VoIP refer to completely different aspects of a phone system and can’t be compared one-to-one. In reality, a phone system can be both a PBX and a VoIP system.

In a sense, comparing the two is like asking if a laptop is better than macOS (the operating system for Apple’s Mac computers). The two simply aren’t comparable, one is a type of computer hardware and one is an operating system. After all, laptops that run on macOS exist!

Do I need a PBX for VoIP?

This is another common question in the VoIP vs. PBX conversation: Do you need a PBX to use VoIP?

The answer is you definitely don’t.

Remember that a VoIP system is any phone system in which calls are transmitted over the internet. Therefore, your residential home phone system can use VoIP technology just the same as a business with a PBX would.

So no, you don’t need a PBX for VoIP calls. And you don’t need VoIP to have a PBX. That said, pairing VoIP with a PBX often unlocks greater flexibility, cost savings and features that can transform the way your business communicates.

Get the best of both worlds with Ooma’s VoIP PBX solutions

Want to upgrade your business phone system? We offer solutions that have all the classic features of a traditional PBX system, plus advanced features made possible by VoIP and cloud technology. Whether you’re a small business or a global enterprise, our systems scale with you and keep you connected from anywhere.

For a free consultation, call us today at (877) 345-8847.