VoIP, or Voice over Internet Protocol, has become a new standard for business communication among in-house employees, remote workers, and with your customers. But many businesses are still confused about whether a cloud based phone system or a PBX solution is right for them. According to research, 24% of businesses are still using conventional phone systems, while others prefer Voice over Internet Protocol solutions. Both these phone systems offer a range of features which support different needs of businesses, but they differ in several things, such as upfront cost, implementation, technical expertise required and maintenance requirements.
This article will explain PBX and VoIP and compare them based on essential factors such as features, cost, reliability, and security.
What is PBX?
Private Branch Exchange or PBX is an on-premises business phone system that uses a conventional Public switched Telephone Network (PSTN) to make voice calls. It connects all the office desk phones in an organization and enables companies to make internal calls and transfer calls between extensions. This phone system is similar to traditional landlines, relying on circuit switching and copper wiring to make and receive calls. Landlines are designed to facilitate personal calls, and PBX facilitates large organizations to operate their telephone data network.
With this phone system, companies can avoid paying fees for telephone networks to get additional phone lines. They can also have greater control over their business phone system as it is located in the office building.
What Is VoIP?
Voice over Internet Protocol (VoIP) is a virtual phone system that uses the Internet instead of physical copper wires to manage all inbound and outbound calls. It is also called IP telephony, online calling, or virtual telephony.
One of the most significant aspects distinguishing VoIP from PBX is its reliance on an internet connection to make or receive internal and external calls.
VoIP does not need a physical or in-house network. VoIP users can easily take their small business phone system anywhere and make calls from VoIP if they can access a reliable internet connection.
It also means VoIP calling is accessible on any device, whether it is your office desktop computer, laptop at home, or cell phone.
How Does VoIP Work?
When an end user makes a call, their voice is converted into small data packets transmitted over the Internet. During transit, these packets may become scrambled. To ensure the recipient hears the conversation clearly, the packets are reassembled in the correct order before being played. This process occurs continuously in both directions throughout the call.
VoIP Vs PBX: A Brief Comparison
Both VoIP and PBX have their advantages and disadvantages. Here, we are describing some key differences:
i. Connection
PBX systems rely on traditional landlines or PRI (Primary Rate Interface) to manage calls, operating on a dedicated network separate from the company’s primary internet-connected LAN.
In contrast, VoIP transmits voice data using the company’s existing internet connection and network infrastructure, such as Ethernet. Each VoIP call typically requires approximately 100 kbps of bandwidth per line.
ii. Features
PBX and VoIP systems provide essential business phone features like call forwarding, conferencing, and voicemail.
However, VoIP often includes advanced capabilities such as video conferencing, instant messaging, mobile apps for remote work, CRM integrations, visual voicemail, and detailed call analytics.
Some VoIP providers also offer contact centre functionality. Moreover, VoIP offers more flexibility in hardware options, supporting IP phones, softphones, and mobile devices, while PBX systems are limited in hardware compatibility.
iii. Cost
Cost is an essential factor to evaluate. Setting up a PBX system requires significant upfront investments in hardware such as servers, routers, gateways, and phones, as well as installation and setup costs.
Additionally, PBX systems incur ongoing expenses for software licenses, maintenance, and traditional phone line charges, which can be up to 60% higher than VoIP costs.
In contrast, VoIP involves much lower initial expenses, mainly purchasing IP phones. VoIP providers typically offer subscription plans starting at $18–$25 per user per month, often including domestic calling, PBX features, and customer support. VoIP also tends to provide cheaper international calling rates.
iv. Scalability
Scalability is a key advantage of VoIP. Expanding a PBX system can be expensive and time-intensive, requiring the installation of additional phone lines and hardware, particularly for new office locations.
In contrast, scaling with VoIP is simple and cost-effective. You only need to purchase additional IP phones, add users to your plan, and, if necessary, upgrade your internet bandwidth. VoIP also allows multiple office locations to connect seamlessly under a single plan.
V. Maintenance
PBX systems require in-house IT staff for management and maintenance, which can be expensive and time-consuming due to the need for specialized PBX expertise.
In contrast, hosted VoIP offloads these responsibilities to the provider, who handles all backend hardware and software. Issues are typically resolved remotely by the provider’s support team, reducing the reliance on on-site IT personnel.
vi. Reliability
Reliability is a critical consideration when choosing a phone system. PBX systems are typically dependable as they operate independently of internet connectivity. However, they are vulnerable to disruptions during power outages or hardware failures.
VoIP, on the other hand, relies heavily on a stable internet connection and robust network infrastructure. Adequate bandwidth and network configuration are essential for maintaining call quality and system reliability.
It is vital to select a reputable VoIP provider with a strong infrastructure. VoIP services may also become inaccessible during internet or power outages.
The following table summarizes the key differences between PBX and VoIP systems, helping you make an informed choice based on your specific requirements.
vii. Security
Security is a critical consideration for both PBX and VoIP systems. Offline PBX systems are naturally immune to internet-based threats. However, they remain vulnerable to physical breaches and toll fraud, where unauthorized users make expensive calls using the system.
VoIP systems are exposed to internet-based threats, but they can mitigate risks through robust security measures such as encryption, firewalls, and network monitoring.
Evaluating a VoIP provider’s security protocols and reputation is essential to ensuring the protection of your communications.
How To Choose Between VoIP And PBX?
Now that you know the main differences between PBX and VoIP phone systems, it is time to choose one for your business. Here are some essential things that you must consider while choosing your business communication system:
Consider Size And Budget Of Your Business
A PBX system might be the right choice if you are a large business with a dedicated IT team and the resources to invest in advanced hardware. PBX offers excellent call quality and reliability, making it ideal for businesses that depend heavily on phone communication.
However, VoIP is likely the better option for small to medium-sized businesses seeking an affordable and flexible solution. VoIP allows you to make and receive calls over the Internet, eliminating the need for costly hardware. It is highly scalable, so you can easily add or remove lines as your business evolves.
Consider Your Required Features
Are you simply looking for basic call forwarding and voicemail, or do you require advanced features like call analytics and CRM integrations? VoIP systems typically offer many features from the start, while PBX systems may need additional hardware or software for specific functionalities.
Evaluate Your IT Capabilities.
If you have a skilled IT team to manage the installation and maintenance of a PBX system, that’s great! However, VoIP might be the more straightforward and user-friendly choice if you lack the resources or technical expertise to handle a complex phone system.
Ultimately, the decision between PBX and VoIP depends on your specific business needs and priorities. Evaluate your requirements, budget, and IT capabilities to choose the best phone system for your company.
Final Words - VoIP vs PBX
Choosing between PBX and VoIP depends on several factors, including the size of your business, budget, required features, and IT capabilities.
For large organizations with dedicated IT teams and the resources to invest in advanced hardware, PBX systems offer excellent reliability and call quality, making them ideal for businesses that rely heavily on phone communication. However, the high upfront costs, ongoing maintenance, and limited scalability might make it less suitable for smaller businesses.
FAQ's - VoIP vs PBX
VoIP (Voice over Internet Protocol) uses the internet to make calls, while PBX (Private Branch Exchange) relies on traditional phone lines or on-premises hardware for internal call routing.
VoIP is typically more affordable, especially for small to medium businesses, as it requires less hardware and lower maintenance. PBX can be costlier due to equipment and setup fees.
VoIP depends on internet quality. If your internet is stable and fast, VoIP is highly reliable. PBX systems are independent of the internet but lack flexibility.
Yes, many VoIP providers support analog telephone adapters (ATAs) to connect traditional phones to the VoIP network.
Modern VoIP systems offer encryption, firewalls, and other security features, making them secure with proper setup and provider support.
