Starting around the 1920s, businesses had switchboard operators with “cord boards” and handfuls of wiring plugs connecting outside calls with inside extensions (think of Lily Tomlin—“Ernestine”—laughing to herself and snorting as she called out, “One ringy dingy, two ringy dingy ...”). Operators performed the same basic functions that automated telephone operating systems perform today: providing switching and connection between telephone users, making sure the connection remains in place until the call finished, ending the connection properly and recording basic metering and tracking statistics for accounting purposes.

It wasn’t until the mid-1960s that switchboard operators at cord boards were replaced by automated analog switches, often called private branch exchanges (PBXs). Those enabled inside users to automatically access outside lines (or trunks) without operator assistance (typically by pushing “9” to get a dial tone), and company operators could direct incoming calls with the push of a button instead of the insertion of cords.

Automated PBXs remain industry-standard devices today, and their basic calling-out function features (push “9” to get a dial tone) work much the same as they always have from the user perspective. Of course, the back ends function in a significantly different way.

In the late 1980s and early 1990s, along with a whole new wave of telecommunications technology, digital PBXs began to replace analog PBXs. That provided businesses with many previously out-of-reach features, such as voicemail, custom greetings, conference calls, automated attendants, speed dialing, call waiting, call forwarding, call accounting, call transferring, music on hold, direct inward system access (the ability to access internal features from an outside telephone line) and many other features that we now consider commonplace.

The continuing Internet revolution, which began in the mid- to late-1990s, has brought another new wave of telecommunications technology in the 2000s, including Voice over Internet Protocol (VoIP) technology, defined by the FCC in 2004: “Internet Voice, also known as Voice over Internet Protocol (VoIP), is a technology that allows you to make telephone calls using a broadband Internet connection instead of a regular (or analog) phone line.” VoIP initially made headway in the business telecom equipment industry by interconnecting physically distant switches and reducing long-distance tolls by routing interoffice voice traffic over company-wide area networks.

PBX vendors responded by beginning to support VoIP directly, with one result being the advent of the IP PBX. Initially, PBX manufacturers did not fundamentally change their PBX hardware architecture in these devices. That has begun to change, and some companies now have made fundamental changes to IP PBX architecture. IP PBXs allow, among other things, an organization to combine (or converge) voice and data networks into a single system for cost savings, simpler management and greater functionality. Both traditional—or legacy—PBXs and IP PBXs remain available to businesses, depending on the needs of the organization.

Modern PBXs still consist of a set of external phone lines that digitally connect a set of internal phone lines; depending on a company’s needs, there may be a console for manual control (e.g., a company operator). They also have highly programmable computer server systems that manage call switching and allow them to perform truly amazing functions when compared to PBXs from years past. Their “outside” functions include the ability to accept all types and sizes of lines, including integrated services digital network (ISDN), T1, inbound direct inward dial (DID) and standard single-pair trunk lines.

In addition to voice mail systems, the inside functions of modern PBXs include the ability not only to display incoming CallerID data on user phones, but to tie into networks and to interface voice mail with “screen pop” software on a PC. Some PBXs can switch desktop video. Similarly, they can offer click-to-call features, whereby users click on a contact record from a data network on a PC screen to initiate a voice call. They can out-dial transferred calls so that employees working remotely can receive calls as if they were in a central building. Conversely, users can dial into modern PBXs via modem or telnet over a network. They offer superior conferencing abilities, in that they can conference many calls together; similarly, multiple PBXs can be tied together seamlessly so that large organizations can transfer both voice mail messages and calls transparently across town or across the world. They can provide station management detail recording (SMDR) billing information, which is the ability of network access equipment to track call statistics and performance information for tabulation and analysis. And even this abbreviated list of features must include PBXs’ ability to be programmed remotely, which makes maintenance painless and relatively low-cost.

IP PBXs can perform additional advanced functions, as well, such as a Web-based control panel for managing extensions and the system in general; an almost infinite number of voice mailboxes with far more flexibility than regular phone systems (including the ability to automatically record all incoming and outgoing conversations); voice mail to e-mail service; automatic, programmed or manual call forwarding to any number; and the ability to manage and remotely administer extensions at other offices just as easily as if they were local. While large enterprises and big call centers have had many of these features for some time, some of the features were never previously available before recent years; smaller organizations never had access to any of them, even if they could have afforded them. Anyone who is old enough to remember business phone systems before the days of such miracle machines should still find that list to be jaw-dropping.

Nonetheless, there always have been drawbacks to automated PBX systems, with cost at the top of that list. So while PBX systems were, and continue to be, practically required in any organization with more than 200 extensions because they are the most versatile kind of phone system available, there remained until recently (and perhaps still) plenty of businesses for which purchasing a PBX was not the right financial choice. Options in the past were to pay the big bucks for the fancy, expensive machine or do without.

IP PBX systems appear to be changing that major hurdle. They are significantly less expensive than legacy PBXs. Recent technological advances coupled with pressure from open-source (or nonproprietary) solutions have brought down the cost of low-end IP PBX systems to under $1,000, making them economical to organizations with as few as five users. From there, however, the costs can grow to tens of thousands, or even higher if the numbers of users grows to the thousands. And, any organization—even a small one—that uses Voice over Internet Protocol (VoIP) technology or IP telephony will need an IP PBX system, especially if it has extensions for each user.

Typically, an IP PBX system is a piece of software running on a server. That server can perform additional tasks, but it usually is dedicated and also acts as the VoIP system’s connection to the Internet. Some manufacturers now make hub-like devices that primarily use VoIP for interswitch communication and support any combination of VoIP or conventional telephone handsets cabled to each hub. Such systems are more analogous to an Ethernet switch than the mainframe-like design of a conventional PBX. 

Depending on the manufacturer, IP PBX benefits can include the ease of adding workstations by simply moving phones equipped with plug-and-play technology to open network connections, the ability for new IP phones to coexist on an existing data cable plant, the ease and relative low cost of managing and monitoring the IP-based system, and its ease integrating new applications.

However, IP PBX systems come with their own sets of issues and concerns, as well. Despite the rather loud claims of the VoIP industry, VoIP has been slow to take off and continues to face resistance in the marketplace. Also of concern is VoIPs’ vulnerability to attacks on a client server system, such as distributed denial of service (DDoS) and attacks, eavesdropping, toll fraud, spam, and viruses. Diligence and vigilance (read: billable hours on the clock) by the IT department are vital. Speaking of the IT department, IP PBX systems put the responsibility of the telephone system onto a company’s IT staff, which is not its traditional home, thus opening the increased possibility for startup (and perhaps ongoing) stumbles and errors.

As with any new technology, a new IP PBX can be difficult to integrate or incorporate into an organization’s existing infrastructure. Further, IP PBX, VoIP and IP telephony technology are not as real-world tested and proven to the degree of legacy PBXs, which is a technology with more than 30 years of field testing and customizing.

Having said that, the words of one IP PBX market advocacy group remain true: “IP PBX systems are the wave of the future. They provide small- to medium-sized businesses the abilities and features that are available to large enterprises, and they do it while providing the potential to reduce long-term operating costs considerably. As with any rapidly growing technology, there are a wide variety of providers and a range of features at a widely varying set of price points.” Furthermore, it is noteworthy that there is not a single major manufacturer of legacy PBXs that is not rushing full-speed into providing IP PBX systems, as well.

IP PBX systems may indeed be the death of legacy PBX systems. Granted, that is not a new assertion; people have been predicting the death of the PBX for nearly 10 years now, and they are still around. But time and the IT industry’s propensity for innovation are both on the side of the IP PBX, and of legacy PBXs going the way of the rotary dial telephone, like the cord board before that. EC

MUNYAN is a freelance writer in the Kansas City, Kan., area, specializing in business writing and telecommunications. He can be reached at www.russwrites.com.